Public sector unions get nod for 7.5% hike

Public service unions representing most of the country’s more than 1.3-million public servants are about to sign a 7.5% sweetened pay hike deal, an agreement that undermines the Treasury’s budgetary commitments.

The unions, which had demanded an 8% wage increase, embarked on a mandate seeking process that ended on Friday, after the employer had raised its offer.

“We are busy consolidating the data and crunching the numbers. But preliminary results show that members are accepting the 7.5% offer,” Reuben Maleka, assistant GM of the Public Servants Association (PSA), which represents more than 235,000 members, told Business Day on Monday.

He said the unions, including the SA Democratic Teachers Union (Sadtu), National Professional Teachers Organisation of SA (Naptosa), SA Teachers Union (Satu), and Health & Other Services Personnel Trade Union of SA (Hospersa), would like to wrap up the process by the end of the week.

Maleka said the signing of a wage agreement would allow the 7.5% pay hike to be implemented on April 1.

The 7.5% wage offer is set to increase the R690bn compensation spending by the state to more than R741bn, raising concerns about the government’s fiscal consolidation efforts as the Treasury had pencilled in an average annual growth rate of 1.6% in government employee salaries for 2023/2024.

Compensation spending is expected to surge to R760bn in 2025/2026, growing at an average yearly rate of 3.3%, according to the Treasury.

Department of public service & administration spokesperson Moses Mushi said the employer tabled a final offer at the general public service sector bargaining

council on March 17, for a twoyear deal including increases of 7.5% and projected consumer price inflation in the final year.

Mushi said the 7.5% increase included the after-tax cash gratuity to the value of 4.2% on the baseline. This, he said, is beneficial to public servants as it contributes to growth in the pensions of employees; improves the notches of employees; increases the base for any future increases; and is “sustainable and permanent”.

“Pay progression of 1.5% for all qualifying public servants shall continue as per the existing dispensation across all departments,” he said.

National Education, Health and Allied Workers Union (Nehawu) deputy general secretary December Mavuso said the Cosatu affiliate did not participate in the 2023/24 wage negotiations due to the wage impasse of 2022/23, which resulted in the employer unilaterally implementing a 3% increase in October 2022.

“We are still stuck in the 2022/23 wage talks. We won’t allow the employer to get away with this as they did in 2022 when they walked away from [implementing the last leg of] the multiterm agreement [of 2018], or when they unilaterally implemented the 3% offer,” Mavuso said.

Nehawu and three other unions, the Police and Prisons Civil Rights Union, the Democratic Nursing Organisation of SA and the SA Policing Union, returned to the bargaining council recently, after reaching an agreement with the employer that the wage deadlock of 2022 would be dealt with and concluded as part of the 2023/24 wage negotiations.

North-West University Business School economics professor Raymond Parsons said: “The public sector wage bill has recently been constantly highlighted by various commentators, as well as the finance minister, as one of the biggest threats to SA’s fiscal sustainability.”

He said the IMF warned last week that SA’s public finances remain vulnerable.

“There was also a clear message in the budget that a public sector wage bill agreement that exceeded the rate of growth of the compensation budget would require measures to contain overall spending through stricter headcount management,” Parsons said.

“It is therefore now necessary for the National Treasury to indicate what steps will now be taken to either reduce public sector employment or where else in the budget funds will be found to meet the muchenlarged wage settlement.”

The Treasury will need to explain how the final public sector wage agreement outcome will affect the planned fiscal metrics and sustainability path as outlined in the budget, Parsons said.

“The ball is now in the National Treasury’s court to provide the necessary reassurances and adjusted metrics,” the professor said.