South Africa's Civil Servant Wage Deal Hangs in the Balance

(Bloomberg) -- A three-year pay deal between South Africa’s government and its 1.3 million workers hangs in the balance after some unions delayed signing it while they consulted their members and others rejected the terms.

A further delay in pay talks that have dragged on since September bodes ill for President Cyril Ramaphosa, who faces next year’s elections and is under pressure from investors and ratings companies to stick to deficit targets.

The deal was scheduled to be signed on Monday, and all six unions affiliated to the Congress of South African Trade Unions, a federation that’s allied to the ruling party, agreed to the teams, Cosatu negotiator Mugwena Maluleke said on May 19. Four other unions that aren’t part of Cosatu rejected the pay deal.

“We are still hopeful the deal will be signed this week,” Mava Scott, a spokesman for the Ministry of Public Service and Administration, said by phone on Tuesday. “The unions are still consulting. If the majority of them sign and 21 days elapse without the others signing, the government has the choice to go ahead and implement it unilaterally.”

The government has proposed raising wages by 6 percent to 7 percent for the year through March 2019 and granting increases of as much as 1 percentage point more than the consumer inflation rate for the following two years.

Spending Plans

Although it exceeds inflation, which reached a seven-year low of 3.8 percent in March, the proposal is in line with the government’s spending plans. The state wage bill is projected to rise 7.3 percent to 587.1 billion rand ($46 billion) in the current fiscal year, and by a similar increase over each of the next two years, the budget shows. Personnel costs account for about 35.2 percent of total government expenditure.

The South Africa Democratic Teachers Union and the National Education Health and Allied Workers Union said they were still canvassing their members on whether to accept it.

Non-Cosatu member unions the Public Servants Association, Health & Other Services Personnel Trade Union of South Africa, National Teachers’ Union and the National Professional Teachers’ Organisation of South Africa have rejected the pay proposal.

©2018 Bloomberg L.P.

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