Claw­back CLAUSE

A legal task team will de­cide if public ser­vants should col­lec­tively get R3bn less based on a clause that links wage hikes to SA’s proven in­fla­tion rate

CityPress - - Business - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­press.co.za

Atask team of lawyers is spend­ing the week­end de­cid­ing how big a wage in­crease South Africa’s gov­ern­ment em­ploy­ees are ac­tu­ally get­ting this year. Lawyers ap­pointed by unions, gov­ern­ment and the Public Sec­tor Co­or­di­nat­ing Bar­gain­ing Coun­cil are hash­ing out a uni­fied legal opin­ion about R3 bil­lion in the public wage bill this year alone af­ter a dis­pute about a “claw­back” clause in the re­cently lapsed wage deal from 2012.

The em­ployer, gov­ern­ment, has agreed to ac­cept the out­come, what­ever it is, while unions have also “in prin­ci­ple” made peace with it.

Two weeks af­ter seal­ing a new three-year wage deal with the state, public sec­tor unions were en­raged when the cir­cu­lar to gov­ern­ment de­part­ments about im­ple­ment­ing the deal fi­nally ar­rived.

They had agreed to a 7% in­crease, but the cir­cu­lar from the depart­ment of public ser­vice and ad­min­is­tra­tion told de­part­ments to give work­ers 6.4% this year.

The public sec­tor unions put out a col­lec­tive press re­lease call­ing it “abom­inable and con­fronta­tional, to say the least”.

“The em­ployer has no busi­ness at­tempt­ing to link a lapsed agree­ment with a new one,” reads the state­ment.

De­spite the fight­ing talk, they have still “in prin­ci­ple” agreed that the legal opin­ion will be ac­cepted.

The miss­ing 0.6% is due to a “claw­back” clause in the pre­vi­ous three-year wage deal from 2012 – a clause that has been re­pro­duced ver­ba­tim in the new deal this year.

Ac­cord­ing to the bar­gain­ing coun­cil’s gen­eral sec­re­tary, Frikkie de Bruin, this pro­vi­sion was al­ways in­cluded in mul­ti­year deals.

Usu­ally, it ended up rais­ing the wage in­creases and has never been used to re­cover an over­pay­ment, he told City Press.

In 2013, for in­stance, public sec­tor salaries got a 0.2% boost due to the same clause.

The in­fla­tion rate in 2012 had turned out to be 0.2 of a per­cent­age point higher than the pro­jec­tion that was used to in­crease wages in April 2012.

The in­crease public ser­vants got last year was, how­ever, too high be­cause it was based on in­fla­tion pre­dic­tions from ear­lier in the year that had turned out to be con­ser­va­tive.

“If the ac­tual av­er­age for the pe­riod is lower than the pro­jected av­er­age, the dif­fer­ence shall be de­ducted from the ad­just­ment for the fol­low­ing year,” reads the claw­back clause.

Although this ap­par­ently un­am­bigu­ous clause clearly raises the pos­si­bil­ity of re­duced in­creases in fu­ture years, unions were seem­ingly com­pletely un­pre­pared for this even­tu­al­ity. Ap­par­ently, the re­cent wage talks were con­cluded on the un­der­stand­ing that 7% was what work­ers would ac­tu­ally get, de­spite the in­fla­tion-ad­just­ment clause in the pre­vi­ous agree­ment.

“We are well aware of the claw­back clause,” said Brian Manuel, pres­i­dent of the Na­tional Pro­fes­sional Teach­ers’ Or­gan­i­sa­tion of SA – the ma­jor non-Cosatu teach­ers’ union.

He claimed ne­go­tia­tors for the state had con­firmed this to the unions, although it was not recorded in the agree­ment. Though Manuel said he had hoped the lawyers could wrap it up by this past Fri­day, it seemed more likely the dis­pute would be set­tled this com­ing week.

De Bruin told City Press the par­ties had agreed to wait un­til the end of June.

The lawyers were ex­pected to come up with a legal opin­ion based en­tirely on the 2012 agree­ment, not on any im­plied prom­ises in the re­cent wage talks.

The unions’ ar­gu­ment is that even though the 2012 deal cov­ered three years, its claw­back clause only cov­ered two.

That’s be­cause its in­tro­duc­tion clearly states that it is set­ting wages for the years 2012/13 to 2014/15. Even though work­ers were over­paid in the past year, the agree­ment can’t be used to re­cover the over­com­pen­sa­tion, goes the union ar­gu­ment.

There is a sense among the role play­ers that the claw­back was an im­po­si­tion from Na­tional Trea­sury, not nec­es­sar­ily the depart­ment of public ser­vice and ad­min­is­tra­tion.

Cut­ting the deal down to 6.4% brings it closer to the range bud­geted for, although a large part of the cost is in benefits, not nec­es­sar­ily the salary in­crease.

In a re­cent in­ter­view with the Fi­nan­cial Mail, Trea­sury’s bud­get head, Michael Sachs, claimed the deal added R66.2 bil­lion to the medium-term (three-year) bud­get for salaries.

That bud­get amounted to R1.53 tril­lion al­ready, with the as­sump­tion be­ing a 6.6% in­crease in em­ploy­ment costs per year.

The state wage bill was around R445 bil­lion in the last fi­nan­cial year.

The dis­pute is around an ad­di­tional 0.6%, mean­ing less than R3 bil­lion per year, which is not ex­actly enough to break the bank any fur­ther than it is al­ready bro­ken, but not in­signif­i­cant ei­ther.

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