Government rebuffed in attempt to curb pay

The Congress of South African Trade Unions said it won’t discuss pay for government workers outside of the Public Service Bargaining Council, setting a tight deadline for the implementation of spending cuts announced in the annual budget.

It had been expected that the issue would be discussed at a meeting of the ruling African National Congress’s National Working Committee on Monday after unions were given less than 24 hours notice ahead of the budget on February 26 of plans to limit pay increases to 1.5% on April 1, well below the inflation-beating increases that had already been agreed.

Read: Ramaphosa makes case for containing public wage bill

“We are clear that no bargaining matters are going to be discussed outside the bargaining council,” Mike Shingange, Cosatu’s first deputy president, said in an interview. By announcing the plans in the budget the government was “negotiating in bad faith,” he said.

Finance Minister Tito Mboweni said in the budget pay increases, benefits and promotions will be limited to save R160 billion over the next three fiscal years to help bring spiralling government debt under control. That’s even as the current three-year wage agreement only ends in 2021.

The government’s behaviour will make it difficult for Cosatu, which at 1.8 million members is South Africa’s biggest labor federation, to consider signing a three-year agreement again, he said. Pule Mabe, a spokesman for the ANC, declined to comment.

South Africa is under pressure to show that it’s acting to curb debt to avoid losing the last investment-grade rating on its debt. Moody’s Investors Service assesses the country’s debt at the lowest investment grade level, while Fitch Ratings and S&P Global Ratings have cut the nation to junk.

The government was supposed to have given labour 21 days notice of any proposed changes and if they do try to unilaterally impose the smaller increase they will risk a strike by the country’s 1.3 million public servants, Shingange said.

“The workers stand ready to defend this agreement,” he said. “It would end any hope of a cordial relationship.”

© 2020 Bloomberg L.P.

Source: moneyweb.co.za