Unions representing municipal workers settled for a below-inflation wage increase — about half the initial demand — on Wednesday, in an apparent vindication of the government’s hardline stance on tightening its wage bill.
Parties to local government wage negotiations agreed on a three-year deal, starting with a 3.5% basic increase and a one-off non-pensionable cash allowance for SA’s nearly 300,000 municipal workers.
Increases “in the outer years of this agreement will be based on the inflation outlook and projections made by the SA Reserve Bank”, the SA Local Government Association (Salga), an employer body representing 257 municipalities, said in a statement.
The three-year deal is in stark contrast to the one-year agreement the government reached with public servants, who were irked by the state reneging on the final part of a three-year pact reached in 2018.
Wednesday’s deal includes no increases in certain benefits, such as homeowner’s allowance and medical aid, which will give cash-strapped municipalities some relief.
The parties also agreed to work on the restructuring of workers’ pension funds, and unions agreed to a clause granting parties the right to withdraw from the agreement and re-enter negotiations in the event of “unforeseen circumstances which impact on the financial sustainability of municipalities and cause economic hardship”.
The initial increase compares with July’s inflation rate of 4.6%, while the Reserve Bank has forecast that the pace of price increases will stay close to the midpoint of its 3%-6% target through to 2023. Together with administered prices such as those for electricity, wage growth is one of the factors that the Bank looks at closely when assessing future inflation and interest rate policy.
Impasse
Negotiations between Salga and unions started in March and a strike appeared to be on the cards when unions in June rejected an independent facilitator’s proposed three-year deal starting with a 4% raise, followed by increases of the projected consumer price index (CPI) minus 1% for the second and third years.
In July, Salga held bilateral talks with the SA Municipal Workers’ Union (Samwu) and the Independent Municipal and Allied Trade Union (Imatu) in a bid to break the impasse. Samwu, which represents about 160,000 workers, had demanded a 7% increase, while Imatu demanded 9%.
Kagiso Pooe, a senior lecturer at the Wits University School of Governance, said the unions appeared to have had little choice but to accept the deal because the government — and the municipalities by extension — stood its ground.
“The financial viability of municipalities going forward is of great concern.
“They are not sustainable, and it’s hard for them to raise revenue through rates and taxes due to the coronavirus pandemic,” Pooe said.
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