Government, unions reach deal on pay hike

THE government signed a three-year pay deal with unions representing teachers, nurses and other state workers after eight months of negotiations, averting a threatened strike.

Civil servants would receive salary increases of 7 percent, backdated to April, for the first year and 1 percent more than the consumer inflation rate for the next two years, Leon Gilbert, the spokesman for the Public Servants Association, one of the unions involved in the talks, said yesterday.

Housing and medical subsidies would also rise, he said.

“We are satisfied that the matter was dealt with in a peaceful manner and that there are no threats of a strike,” Gilbert added.

The settlement is broadly in line with a provision made in the February 25 Budget for the wage bill to rise by an average 6.6 percent in each of the three years through March 2018.

The state’s accord with its 1.3 million workers will help provide certainty to its finances as the Treasury seeks to reduce the budget deficit and avoid credit rating downgrades.

“It’s a solid compromise,” Kevin Lings, an economist at Stanlib Asset Management, said yesterday.

“It’s manageable for the Treasury in terms of their medium-term budget. It would have been disastrous to go into a public sector strike given how weak the economy is.”

State personnel costs have surged 90 percent to R445 billion since 2009 and account for almost 36 percent of total government spending, according to data from the Treasury.

The inflation rate rose to 4.5 percent in April from 4 percent in March, Statistics SA said yesterday. Unions initially demanded a 15 percent pay hike, more than triple what the government was offering.

The settlement provided for civil servants’ medical insurance benefits to rise by 28.5 percent starting this year and for a R900 increase in housing allowances, Nomusa Cembi, a spokeswoman for the SA Democratic Teachers Union, said.

The government was still deciding how to finance the pay increase that was not provided for in the Budget, Labour Minister Mildred Oliphant said.

“It was a close call,” she said. “There will be no strike. I’m very happy.”

Public workers secured 7.5 percent increases in 2010 after embarking on a threeweek strike, and in 2012 agreed to a three-year settlement that raised wages by 7 percent in the first year and inflation plus 1 percentage point for the next two years.

“It helps from a negotiating point of view that inflation has been relatively low,” Lings said.

“It’s not as if they now have to trash other areas of expenditure to make the wage bill. I think it will be well accepted by rating agencies.” – Bloomberg