Parties to the Public Service Co-ordinating Bargaining Council (PSCBC) are to meet again next week after failing to broker a wage hike deal for the 2022/2023 financial year this week.
Public service unions and government representatives met at the PSCBC, a platform where unions and the employer agree on wages and conditions of employment, on Tuesday to continue with negotiations.
The engagement followed the employer’s rejection on May 19 of labour’s demands for a 10% pay hike across the board, tabled at the bargaining council on May 4.
The state rejected most of the unions’ demands and instead proposed the extension of the R1,000 after-tax cash gratuity to the more than 1.3-million employees and a 1.5% pay progression hike, which is linked to years of service and is always pencilled into the budget.
The offer was 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.
PSCBC general secretary Frikkie de Bruin said in a statement: “The employer tabled various scenarios on the possible distribution of the R20.5b available within the fiscal framework.
“These scenarios included a proposed 4.5% increase across the board, a proposed sliding scale distribution from 6% for level 1 [lowest-paid employees] to 3.5% for level 12 [senior management], and a sliding scale scenario from 15.4% for level 1 to 1.5% for level 12.
“Labour rejected the scenarios presented by the employer and proposed a further two scenarios for consideration based on an 8% [for senior management] and 9% [for lowest-paid employees] increase on the base line across the board,” he said.
Public Servants Association assistant GM Reuben Maleka told Business Day on Thursday that the employer’s proposals could translate to lowest-earning employees getting bigger increases, compared to their senior management colleagues.
De Bruin said parties “agreed to retreat and consider the proposals made. Negotiations will continue in the week of June 6”.
The wage talks come at a time when workers in various sectors of the economy are on strike or threatening to down tools 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 of 3%-6%.
The government has warned that any increase on the baseline would significantly disrupt the fiscal framework. Unions have cited the rising cost of living including the sharp increase in fuel price, electricity, food and transport costs for demanding inflation-beating increases.
The other demands government has rejected include a R2,500 increase in the housing allowance, which the employer said would cost R10.8bn, saying 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”.
Altogether, the unions’ demands would cost R146bn to implement, 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.
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