Public sector unions have set themselves up for a battle with the state, asking for an increase well above inflation less than a week after finance minister Tito Mboweni staked the credibility of the government’s fiscal framework on keeping a lid on compensation costs.
According to the demands tabled at the Public Service Co-ordinating Bargaining Council on Monday, seen by Business Day, public sector unions asked for an across-the-board increase equivalent to the consumer price index (CPI) plus 4%.
Having previously started negotiations demanding double-digit settlements, union representatives said this was not excessive. That is despite the proposed settlement being far in excess of what would be seen in the private sector, where workers faced wage cuts and retrenchments in the light of the Covid-19-induced economic shock since early 2020.
The Treasury is predicting that CPI will average 3.9% in 2021. Asking for an increase across the board may be a tactical move by the unions, as it leaves space to move over to a sliding scale as negotiations continue, and they may compromise on their demands once talks begin in earnest.
The negotiations are set to be tough and will further test relations between the governing ANC and its allies months before the country holds local elections. Cutting the wage bill is critical in terms of SA’s fiscal framework, and Mboweni last week unveiled a budget that proposed what amounted to a wage freeze for the next three years.
According to last week’s Budget Review, public-service compensation took 41% of revenue in 2019/2020, rising to 47% in 2021, a trend it said could not be sustained without compromising capital investment and spending on services. The government is facing scepticism from ratings agencies and economists that it can keep debt as a proportion of GDP below 100% in the next five years.
Labour’s demands also indicate that unions want the lowest salary bands to be abolished, and for level 4, which provides for a higher salary than the first three levels, to be the entry level. Salary levels in the public service range from levels 1 to 12.
The final demands to be tabled were completed in a meeting with union leaders on Monday morning. The meeting had to iron out some of the last sticking points, which included determining whether the unions will ask for increases on a sliding scale or for an across-the-board hike.
Mugwena Maluleke, chief negotiator for the Cosatu public sector unions, said unions were not asking for double-digit increases, which showed they were "acknowledging that the economy is not well.
"However, we do not agree that wages should be suppressed," he said.
Maluleke said the unions did not see their demand as excessive because of 2020 settlement trends in other sectors that rely on the public purse, such as parastatals and municipalities that got about 6%.
According to the Budget Review, most municipalities started implementing the first of a three-year agreement in July 2020 that raised wages by 6.25% a year, something that some of them had not budgeted for, and risked compromising service delivery.
While the government has intimated that it will ask for a multiyear agreement, unions are set to sign only a single-year deal, which may raise concern about labour instability as pacts are revisited more regularly.
After the government reneged on the final year of a multiterm agreement in 2020 by refusing to pay increases provided for in the agreement signed in 2018, unions have been adamant that they will not enter into anything other than a single-year agreement.
While unions had gone to court to enforce compliance with the 2018 agreement, the Labour Appeal Court decided in favour of the state, declaring the agreement unlawful as the National Treasury had not committed funds to pay for the increases in the final year.
In terms of other demands, labour asks that parties conclude a collective agreement that regulates conditions of service of employees when faced with disasters such as the Covid-19 pandemic. To deal with this, unions want a risk allowance of 12% of the basic salary. This will especially be important for public sector health-care workers.
Also in the unions’ demands is an amendment to the Public Service Co-ordinating Bargaining Council constitution so it is empowered to ensure enforcement of all collective bargaining agreements signed under it. Frikkie de Bruin, general secretary of the council, said negotiations have to start within 21 working days after the demands have been tabled, in terms of its constitution.
Pre-negotiation proceedings are expected to take place in the middle of March. The department of public service & administration has not yet commented on labour’s demands.
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