Business Maverick

BUSINESS MAVERICK

State bows to trade union pressure and offers public servants a salary adjustment and cash bonus

Minister of finance Tito Mboweni. (Photo: Leila Dougan)
By Ray Mahlaka
17 May 2021 12

The government has been adamant about a three-year salary freeze for public servants. Then, trade unions declared a salary dispute and warned of a nationwide strike. Now the government has backtracked, tabling a 1.5% once-off salary adjustment and a monthly cash bonus of R978.

After insisting that South Africa’s 1.3 million public servants would not get salary increases or adjustments at all over the next three years, the government had an abrupt change of mind at the weekend. 

In its ongoing salary negotiations on Sunday, 16 May 2021, with public sector trade unions at the Public Service Coordinating Bargaining Council (PSCBC), the government tabled a “once-off” salary adjustment of 1.5% for public servants including doctors, nurses, teachers, police officials and others.nThe PSCBC is where the government and trade unions negotiate the terms of employment in the public sector.  

The 1.5% offer is not new, as it has already been budgeted for by the National Treasury as part of its existing pay progression framework. The cash gratuity is a budgetary addition but is expected to be fiscally neutral as the Treasury will fund it through the pooling of existing benefits for workers.

The government – represented by the department of public service and administration – sweetened the deal by offering union members a monthly cash gratuity of R978. A cash gratuity is similar to a bonus. 

The once-off salary adjustment of 1.5% and cash gratuity were meant to be implemented from 1 April 2021 to 31 March 2022. But the government and trade unions have been on a collision course since the beginning of 2020, after finance minister Tito Mboweni announced a three-year salary freeze to cut government expenditure and bring debt of R3.95-trillion under control. 

This dispute delayed any public sector salary adjustments, which are normally implemented by the government each year on 1 April. 

It’s unlikely that the unions will be happy with the 1.5% salary adjustment as they have already tabled an adjustment of consumer inflation plus 4%, which works out to an increase of 8.3%. 

The department’s negotiators presented their revised offer to the unions at a PSCBC meeting on Sunday. Business Maverick has seen a copy of the presentation by negotiators that details the revised offer.

In the presentation, the department said it has approval from National Treasury to table the revised salary adjustment and cash gratuity offer, despite Treasury having reiterated its intention to not award public servants any salary increase for the next three years. 

“The employer, duly represented by the Department of Public Service and Administration, warrants that it has the requisite authority and National Treasury approval to conclude this agreement [the revised offer],” the department’s presentation to trade unions reads. 

Kamogelo Mogotsi, spokesperson for the department of public service and administration, said negotiations were ongoing and the government’s tabled offer was not final. 

“The government negotiations team is still hard at work in the chamber [PSCBC]. We are dealing with 16 demands and we are still very much at work. 

“Government has given the team a few options to consider in their engagements with Labour in respect of all 16 demands,” Mogotsi told Business Maverick

Treasury wants to reduce expenditure on the civil service wage bill by R300-billion over the next three years. At R650.4-billion in the 2021/22 financial year, expenditure on paying public servants is the largest component of government’s overall expenditure. In other words, public sector compensation accounts for around 35% of government expenditure. 

Government negotiators believe there is space in public finances to fund the proposed salary adjustments and cash gratuity. 

“The employer [the government] has made funding available to ensure the payment of a non-pensionable cash gratuity and an increase in pensionable salaries where applicable in this agreement,” the negotiators said in their presentation.  

Expenditure on public sector compensation crowds out the government’s expenditure on investments and economic growth-inducing initiatives. The state wage bill has exploded from R154-billion in 2006/07 to R650.4-billion by 2021/22. 

The main driver of compensation growth has not been the increase in the number of people hired by the state (1.2 million in 2006/07 versus 1.3 million in 2021/22), but basic pay that has been adjusted annually at a rate higher than consumer inflation. 

Criticism of the government’s revised offer is flooding in from labour circles. On 11 May, the Public Servants’ Association of SA (PSA) declared a dispute over the government’s proposal after three days of negotiations at the PSCBC failed to yield results. 

PSA assistant general manager Reuben Maleka said the government did not invite the union to the meeting on Sunday as the PSA had lodged a dispute over the salary increase negotiations. It has rejected the 1.5% salary adjustment and cash gratuity. 

“From clarity obtained, it appears that the 1.5% that is being offered is already in place in the form of a pay progression that employees qualify because of satisfactory performance. In essence, employees are only offered a non-pensionable gratuity (type of allowance) of R978 before tax,” said Maleka. DM/BM

This article has been amplified to address the issue of the fiscal impact.

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

All Comments 12

  • So this is where the Gini coefficient is geting even more lopsided. 1.5% of a small salary is nothing. 1.5% of a big salary is a lot. The unions and the state are steering the SA economy further over the edge. The insights of both parties are being dictated by narrow short-term political gains.

  • So, on top of being comparatively handsomely remunerated: salary +med. aid+housing subsidy+annual bonus, public servants are rewarded for the bare minimum of job performance (“satisfactory”) with 1.5% pay progression?! That says it all.

  • Let’s commit to either:

    1) Freezing the salaries
    2) Giving them their salary increases as requested and bringing in the IMF within three years to run govt.

    Let’s stop dancing around this and finish this issue once and for all.

  • Considering that many (if not most) civil servants sat at home for a large part of the last 14 months (granted not their fault), why are they getting bonuses and salary increases? During their ‘covid leave’ they incurred none of the regular expenses associated with travel to the office etc..

  • And these uncivil servants were paid all the way through Covid-19 lock downs that destroyed many other peoples livelihoods. Another farce brought to you by the #voetsekANC.

  • Doctors, nurses, and teachers should not be lumped in with other public service workers. The latter are piggybacking off those who have been working at great personal risk throughout this pandemic. Doctors, nurses and teachers should have been given a one off bonus for their selflessness.

  • Treasury and the negotiators woosed.
    The right answer would have been to offer them -1.5% …because we cant afford even that anyway.
    And no-one is telling the youth tax payers that THEY will be paying for it. It not like the fiscus has the money unless they borrow more money

  • Please, someone, anyone, explain to me where the money for this is going to come from? The ANC is so broke it can’t pay its own employees – they have raided the cupboard with regard to SOE’s, provinces, municipalities etc, and the IMF & others won’t fund them again in a hurry. So What Next?