President Cyril Ramaphosa is right about one thing: The government's financial position is both precarious and unsustainable.

We are spending more than we earn and as stated in his weekly newsletter yesterday, our country spends more servicing debt than we do, for example, on providing health services.

It is therefore a no brainer that government must reduce costs.

The bone of contention is how.

So far government has opted to reduce the wage bill rather than employing other austerity measures. "We have made a deliberate decision not to pursue a path of austerity," Ramaphosa wrote in his newsletter.

"Such a route would have seen deep cuts in spending on the social services that poor people rely on. It could have involved dramatically reducing the salaries of civil servants, the size of the public service, cutting bonuses and pensions, raising taxes and selling off key state assets."

When faced with few options, it is understandable to want to cut back on salary increases than, for example, on services that affect people living in poverty.

However, it is an option that has angered unions. It means government as an employer would undermine a legitimate, multi-year wage agreement in place - a move that would be the subject of legal scrutiny should labour challenge it in court.

Politically, Ramaphosa has kicked the hornets' nest.

On this matter he stands in cross hairs with an alliance that backed his presidency, at a time when his grip on the party is arguably at its most vulnerable.

Ramaphosa met the alliance yesterday for the first time since the spending reduction plan was tabled by finance minister Tito Mboweni last week.

Early indications are that labour federation Cosatu is so confident in its legal position that it's unlikely to blink first.

Whether the president can negotiate a legitimate compromise that will stave off a looming showdown and save the public sector from further financial erosion is yet to be seen.

What we know, however, is that yesterday's meeting was the first of what is undoubtedly to become a series of political negotiations which will ultimately shape Ramaphosa's future as president.