Finance minister Enoch Godongwana has taken charge of the public sector wage negotiations in a bid to control the wage bill, which accounts for the biggest share of government spending.
This is the first time since the dawn of democracy that the finance minister rather than the public administration minister has taken charge of the wage talks, reinforcing the Treasury’s determination to keep the R665bn public sector salary bill in check as it reins in spending.
The state’s wage bill has increased exponentially in recent years.
The department of public service & administration has been left without a permanent political head since April after the departure of minister Ayanda Dlodlo to take up a new job at the World Bank.
However, Godongwana told Business Day in an interview on the sidelines of the ANC’s weekend policy conference that this had not affected the wage negotiations. “I’m part of the meetings in terms of strategy and managing it. I’m at the core because it is my major cost item ...
“I have an interest in how it moves,” he said.
Godongwana said the Treasury remained committed to controlling the wage bill, adding that the government would look to wage restructuring instead of wage freezing.
“Part of the discussion must be [whether] we have a bloated public service ... how do we restructure so that we have more people in front-line services such as nurses, teachers, doctors and police?
Headcount
“Our problem is not headcount, our problem is unit cost ... The second problem is we have people in wrong places and we don’t have people in right places.”
He said the government proposed to the unions that public servants sign a one-year agreement because the government had already pencilled in a rise of about 1.8% in compensation over the medium term.
“We have tabled a couple of items [but] part of the difficulty is that I’m negotiating now on a wage bill, but my budget is already cast,” Godongwana said.
"[I said] let’s bring 2022 and bring everything [to a close] so that we should start negotiations at the top for the next financial year before October’s [medium-term budget policy statement] so that by October, we have an idea of projections.”
Godongwana’s input at the negotiating table follows a revision of wage demands by union leaders representing more than 1.3-million public servants.
In July, the Public Servants Association trimmed its demand to an increase of 6.5% from an opening level of 10% when negotiations began in May, indicating that labour wishes to avoid a repeat of 2020’s protracted legal dispute with the state over the payment terms of a multiyear wage agreement negotiated in 2018.
Treasury’s sign-off
Labour and the government have been locked in talks for weeks after unions initially rejected the state’s offer of a 2% pay increase plus the extension of a R1,000 cash gratuity.
The state has argued before the Public Service Co-ordinating Bargaining Council that extending the R1,000 after-tax cash gratuity equates to a 4.5% increase, taking its overall pay rise offer to 6.5% when combined with a 2% cost of living adjustment offer.
The parties are expected back at the council on August 3.
Any deal between the unions and the public service & administration department would need the Treasury’s sign-off. According to the 2022 Budget Review, the public sector wage bill accounts for the biggest share of consolidated expenditure in 2022/2023. The consolidated wage bill is projected to grow by an annual average of 1.8% over the medium term.
The wage negotiations in recent years have been closely watched by investors and credit ratings agencies, which previously sent SA’s debt deeper into junk territory.
With Luyolo Mkentane
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