State offer would cut wage bill by R10.5bn

• Public servants offered lump sum and pension holiday • Government seeks time to cost plan

A one-off cash payment or bonus and a year-long pension holiday are part of a new settlement the government put to public servants this week as it moves to resolve the impasse with labour over the contentious third leg of the 2018 wage deal.

The wage bill is the single most expensive item in the national budget and the widening deficit means the state has to urgently curb spending. It is among the main reasons cited by ratings agencies for further downgrading SA’s investment ratings two weeks ago.

In court papers, finance minister Tito Mboweni describes the 2018 agreement as the “largest claim against government ever to be raised in any labour forum”.

Business Day understands that the new proposal, put to public sector unions on Monday by the department of public service & administration, would reduce the cost of the initial 2018 package from R37.5bn to about R27bn. However, the government has asked for more time to work out the finer details of the proposed settlement.

The vague explanation on the costing that unions received from the government was that pension contributions for public sector workers would not be paid out to the Government Employees Pension Fund for one year. Instead they would be held back and then paid out to employees in one lump sum. But the government asked unions to give it more time to finalise the costing of the settlement.

Public Servants Association (PSA) GM Reuben Maluleke confirmed that this offer was made to the PSA – and was roundly rejected. “Yes they made that offer to us on Sunday and we rejected it immediately. We are now waiting for the outcome of the court case,” he said.

SETTLEMENT TALKS

Earlier in 2020, the government unilaterally decided not to implement the third leg of a three-year deal signed with unions in 2018, arguing that it is unaffordable. The matter is now before the labour appeal court, but on Tuesday the government asked unions to postpone the case to pursue further settlement talks.

This is after months of silence

by the government and a legal tug-of-war involving unions, the Treasury and the department.

The department could not immediately be reached for comment.

NO MANDATE

The government has argued that the increase agreed to is now unaffordable and therefore can’t be implemented.

It was signed off by then public service & administration minister Faith Muthambi, who, the government argues, did not have a mandate.

Unions aligned to federation Cosatu and independent unions have rejected the government’s bid to have the matter before the labour appeal court postponed.

Business Day understands that labour is open to further talks but will not abandon their court bid to compel the government to implement the deal.

Sources close to the process said unions were asked whether a one-off payment, as well as a one-year “payment holiday” on their pensions, could be palatable to their members, instead of the consumer price index plus 2% increase agreed to in 2018.

But the state has not costed the offer or provided adequate information on the finer details of the proposed package.

“The government is making it very difficult for us. The people they have sent to present these things appear incompetent … there are no real details, it’s almost a political discussion instead of a negotiation.

“How can we take that back to members?” one labour representative, who wished to remain anonymous, said.

Another said the labour court case has to continue and some unions are willing to continue talking to keep communication channels open, but others, such as the National Education, Health and Allied Workers Union, are unmoved by the government’s latest overtures.

THE PEOPLE THEY HAVE SENT TO PRESENT THESE THINGS APPEAR INCOMPETENT … THERE ARE NO REAL DETAILS