Govt ‘hikes’ wage offer to 7.5%, public wage bill may balloon to R700bn

South Africa’s public sector wage bill is likely to balloon to nearly R700 billion, if a final wage offer averaging 7.5% by the ministry of public service and administration is implemented.

The hike to 7.5%, announced in a late-night statement on Thursday, seems to be a clear effort by government to avert a nationwide strike by public sector workers next Tuesday.

Read: Civil servants plan to march to Treasury

Acting Minister of Public Service and Administration, Thulas Nxesi, said in the statement that government has made a new offer of 7.5% to labour unions representing more than 1 million workers under the service of the public sector.

He also pointed out that the move would add R34 billion to the country’s already strained fiscus. The government’s initial offer was for a 3% wage increase, which was dismissed by public sector workers in the face of inflation in South African peaking at almost 8% in July.

Nxesi said the latest offer is 3% pensionable and 4.5% non-pensionable and will kick in for the 2022/2023 financial year.

Added to the R665 billion South Africa already pays in public employee compensation, the salary hikes (if accepted) will see the country’s new wage bill hitting almost R700 billion, which will be closer to a level Finance Minister Enoch Godongwana projected would be only reached in 2025.

Godongwana said earlier this year that he expects the wage bill to grow at a rate of 1.8% annually.

The 7.5% offer on Thursday also comes ahead of the ANC Elective Conference in Johannesburg in December. Party leader and SA President Cyril Ramaphosa would want to avoid a drawn-out public sector strike ahead of the conference.

Read: Public sector wage talks leave Ramaphosa in tight spot

‘Misleading’ wage offer

Despite the new offer, unions insisted on Friday that no new or final offer has been made.

Nehawu national spokesperson Lwazi Nkolonzi told Moneyweb the government’s statement was misleading the public, adding that unions have not rejected a revised offer of 7.5%.

“The only final offer that was tabled was at the Public Service Coordinating Bargaining Council [PSCBC] and it was the 3%”,” says Nkolonzi.

He said no government official of the public service administration had engaged the unions about a new or final offer after the unions announced their intention to strike yesterday.

“The correct and proper platform to make an offer is at the PSCBC, and the last time was between 31 October and 1 November when we were issued certificates of non-resolution. There’s been no other engagement.”

Shocked

“We were quite shocked last night when we saw that statement,” said Nkolonzi.

The unions have read the statement as the government’s ploy to discourage workers from striking next week, public service unions under the Congress of South African Trade Unions (Cosatu), Federation of Unions of South Africa (Fedusa) and South African Federation of Trade Unions (Saftu), said in a joint statement on Friday.

“This is not true, there was never a 7.5% offer that was presented at the PSCBC, but the government has been trying to pull the wool over public servants by distorting the offer,” the unions said.

The unions added that the government “sneakily combined” a R1 000 stipend, and the 3% baseline increase in its calculations, rounding it up to a “fictitious 7.5% increase”.

“This means that the government is making an extraordinary claim that this R1000 stipend amounts to 4.5% and combined with their current 3% offer, this amounts to 7.5%,” the unions noted in the joint statement.

Read:
SA stands firm on state wage restraint as strike looms
Strike looms as SA rejects civil servants’ pay demands
Government is on collision course with civil servants over pay

“The maintenance of labour peace remains a critical part of the efforts to professionalise the public service as contained in the Cabinet approved Professionalisation Framework,” Nxesi stressed in his statement on Thursday.

Nxesi urged unions to return to negotiating table “to resolve all disputes”.

“If we fail to reconvene and agree on a new agreement to engage and settle the matter of wages, we are likely to find ourselves in the same predicament where the budget tabled the minister of finance will inform the limits for the wage negotiations and not the other way around as it should be,” he explained.

March to Treasury

Earlier on Thursday, civil workers vowed to march to the National Treasury’s offices in Pretoria with additional marches planned in all other provinces in coming days, in bid to get the government to raise its offer to workers.

That would see major disruptions in key government services such as public healthcare and home affairs.

The latest wage offer announced by Nxesi appears to be significantly higher than what Godongwana tabled in his Medium-Term Budget Policy Statement last month, making the finance minister’s task of curbing the wage bill tougher.

Godongwana previously unilaterally implemented a 3% wage increase, saying higher public-service wages would pose risks to the country’s already murky fiscal outlook.

The government said it effected the new offer to recognise public servants for their continued service and that they are not disadvantaged.  It also said it is safeguarding the fiscal health of the country and is ensuring the current budget isn’t repurposed for other government priorities, among other reasons.

Read: Finance Minister: Public service wage bill risk to SA’s fiscal framework