Country faces stark choice over state wage bill

SA faces a stark choice: risk strikes by as many as 1.3m government workers or meet their pay demands and jeopardise its credit rating. Tech Central reports that after years of above-inflation increases, public sector unions now want nothing less than ‘double digit’ raises from 1 April 2018, in addition to better housing benefits. National Treasury has provided for average pay increases of no more than 7.3% in each of the next three fiscal years. The annual inflation rate is 5.1%. ‘We cannot afford the government wage bill,’ Mike Schussler, the chief economist at Economists.co.za, said. ‘We have got to either give people an increase below the rate of inflation, or we are going to have to employ fewer people.’ The report said last week the National Education Health and Allied Workers Union (Nehawu), which has 295 000 members and speaks for the biggest number of public sector employees, said it will reject offers of less than 10% and says pleas for austerity are undermined by reports of corruption at state companies. Government employees represented by the Public Service Association want increases of 10-12%.

Nehawu says it is ready to fight attempts by the Treasury to cap the public sector wage bill by freezing salaries. And, Business Day reports, the union said it would also oppose suggestions that its members only receive wage hikes related to the consumer price index (CPI). Finance Minister Malusi Gigaba was quoted as saying he was considering freezing the salaries of senior public employees from middle management upwards. ‘That is not going to happen,’ said Nehawu deputy general secretary December Mavuso. Nehawu said Gigaba should rather tackle cases of wasteful expenditure in order to cut back on government spending amid a R50bn budget shortfall. ‘Workers are not stupid, communities are not stupid. We can’t be blackmailed... If it comes to a crunch, we are going to fight,’ said Mavuso. The report says government negotiators cancelled a bargaining council meeting set for 20 October, during which it was expected to issue a counter-offer to workers after unions tabled a demand of 10% wage hikes for the highest-paid public servants and 12% for the lowest paid.