Monday, October 15, 2018
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South Africa Offers State employees Inflation-Busting Pay Rise

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South Africa is providing unions representing 1 million state employees inflation-busting pay rise at a time when the country needs to rein in spending to assist keep its investment-grade credit rating.

Negotiations over wages for teachers, nurses and different state workers are testing the ability of the new cabinet, led by President Cyril Ramaphosa, to walk a political tightrope with labor unions that supported his rise and keep the country’s finances in check.

The National Treasury wants the state to contain the public-sector wage bill, which has crowded out spending in other reports

The government has offered increases of 7 percent for the most-junior employees for the year through March and 6 percent for senior employees as well as managers, a document seen by Bloomberg shows. consumer prices rose 3.8 percent in March.

The unions had demanded a 12 percent pay rise — more than double the central bank’s forecast of 4.9 percent for average inflation this year — and down the request to 10 percent on may 4, in line with an official familiar with the talks who declined to be identified.

“We have received a proposal that is worth the consideration of our members,” Sizwe Pamla, spokesperson of the 1.7 million-member Congress of South African Trade Unions, said by phone.

“We will allow our employees to have interaction comprehensively and can implement whatever mandate they offer US. we can’t rule out or promise anything, it’s in the workers’ hands.”

Ramaphosa, himself a former labor-union leader, can’t afford to upset state employees before next year’s election, where his ruling African National Congress will seek to reverse recent electoral losses.

Cosatu, the country’s biggest labor-union federation, helped him win the ANC’s presidential race that paved the way for him to succeed Jacob Zuma as the country’s president three months ago.

Negotiations for the three-year pay rise resumed in January and were subjected to many delays owing to the change of guard. The unions have till Friday to consider the offer made at a dialogue council where eight labor bodies are drawn.

The Public Service Association, which has about 200,000 members and isn’t part of Cosatu, isn’t supporting the offer, Deputy general manager Tahir Maepa said, without giving details.

“It’s worse than what we received at the beginning,” he said by phone. “There’s no way we’ll accept.”

Public Service and Administration Ministry spokesperson Mava Scott said negotiations protocol prevented the government from commenting at this stage as that might jeopardize the talks.

The National Treasury wants to cut back the budget deficit to 3.6 percent of gross domestic product in the year through March 2019 from 4.3 percent in 2017-18, it said in the February budget.

Wages accounted for about thirty five percent of total state spending in fiscal 2018, up from about 33 percent in 2008, it said.

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