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
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.