The government has rejected nearly all of the public sector unions’ double-digit pay hike demands, demonstrating its commitment to keep its ballooning wage bill in check and setting it on a collision course with the more than 1.3-million strong workforce.
In a document, which Business Day has seen, the state is proposing the extension of the R1,000 after-tax cash gratuity to employees and a 1.5% pay progression hike, which is linked to years of service and is always pencilled into the budget.
The offer is in line with the government’s budgetary commitments to restrict the growth in the R665bn public sector wage bill, which eats up more than one-third of government spending, to an average annual rate of 1.8%. The extension of the after-tax gratuity can easily be covered by the R20.5bn already in the 2022/2023 budget.
“The state proposes that the current dispensation of cash gratuity for 2022/2023 should continue, as any cost on the baseline would significantly disrupt the tabled fiscal framework,” according to the document, which outlined the government’s official position for the first time since the public sector unions put forward their demands.
But, the proposal is miles away from the 10% pay increase demand tabled in recent weeks by union leaders representing teachers, nurses, police officers and other public servants, who may be emboldened by revenue overruns to hold out for more as they see their incomes squeezed by the rising cost of living.
“We are not accepting the response of the employer. We are meeting again on May 31 as unions to chart the way forward. They [the employer] must go and revise their budget and come back with something that can be acceptable,” said Reuben Maleka, assistant GM at the Public Servants Association.
The stances taken by the unions and the government — which is determined to rebalance public finances after the growth of remuneration over the past decade far outstripped inflation and GDP growth — raises the risk of strikes that could shut down parts of the economy. The negotiations come at a time when workers elsewhere in the country are on strike or threatening to strike in support of inflation-beating pay rises as the official inflation rate — at 5.9% — threatens to breach the upper band of the Reserve Bank’s official target range. A strike at Sibanye-Stillwater’s gold division is due to enter its 11th week on Monday.
In the document outlining its position to the demands of public sector unions, the government also proposed that all other demands should be deferred to the 2023/2024 round of negotiations, which is due to start in July and end the following month.
Labour’s other demands include a R2,500 housing allowance and permanent employment of community health workers, teacher assistants and security force reservists. It also demands access to the pension fund; bursary schemes for children; and allowances of 12% of workers’ basic salary during disasters such as Covid-19.
The government rejected the demand for a R2,500 increase in the housing allowance, saying it would cost R10.8bn and the allowance should be increased in line with the consumer price index. It also rejected the demand for allowances of 12% of workers’ basic salary during disasters, saying that would cost the fiscus R56.1bn and “significantly disrupt the already tabled fiscal framework, with the potential of negatively impacting service delivery”.
Labour’s demand for access to pension fund savings was dismissed by the employer, which said the matter is before the National Economic Development and Labour Council.
Taken together, the unions’ demand would cost R146bn, with the 10% pay hike contributing just more than R49bn.
The state’s headcount and remuneration drives its wage bill. From 2006/2007 to 2019/2020 the number of state workers grew 16% but grew at a rate of 17% in 2020/2021 after the onset of the Covid-19 pandemic. This raised the wage bill by R53bn.
The Treasury has said the devastation caused by the flooding in KwaZulu-Natal makes it even more important to keep the public sector wage bill in check.
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