BUSINESS MAVERICK

Government sweetens compensation offer (again) for public servants in bid to break impasse over salary increases

By Ray Mahlaka 4 July 2021

Trade unions representing a majority of public servants and affiliated with Cosatu have accepted the government’s salary increase offer. (Photo: EPA / Kim Ludbrook)

The government has offered trade unions representing public servants a monthly cash bonus of between R1,220 and R1,695. But it has reiterated that it will not offer public servants inflation-busting salary increases.

Ray Mahlaka

The government has further sweetened its offer to trade unions representing SA’s 1.3 million public servants to break a long-standing impasse between both parties over salary increases and other remuneration benefits. 

In May the government — represented by the Department of Public Service and Administration (DPSA)— offered trade unions a monthly cash gratuity of R978 for their public servant members such as doctors, nurses, teachers and police officers. A cash gratuity is similar to a bonus. 

The government offered trade unions the cash gratuity over and above a “once-off” salary adjustment of 1.5%, which is automatically due to all public servants between 1 July 2021 and 31 March 2022. The 1.5% offer 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.

But trade unions and labour federations — including the Public Servants Association (PSA), affiliates of Cosatu and the Federation of Unions of South Africa (Fedusa)— have rejected the government’s 1.5% salary adjustment offer as they are steadfast on a salary adjustment of at least consumer inflation plus 4%. This works out to an increase of more than 9% as inflation was 5.2% for May. Trade unions also rejected the cash gratuity of R978 per month and tabled a counterproposal of R1,500. 

Labour federations such as Fedusa and Cosatu itself are not members of the Public Service Coordinating Bargaining Council (PSCBC), but their trade union affiliates such as the PSA, the South African Democratic Teachers Union, and the National Education, Health and Allied Workers’ Union (just to name a few) are. Fedusa and Cosatu are interested parties or stakeholders in PSCBC processes. 

 

In its ongoing salary negotiations on Thursday, 1 July with trade unions at the PSCBC, the government proposed an increase of the monthly cash gratuity from R978 to between R1,220 and R1,695 —  depending on the employment level and take-home pay of public servants. 

For example, public servants who fall under salary levels one to five — generally lower-paid workers in the public sector — would receive a cash gratuity of R1,220. Public servants who fall under salary levels six to 12 — higher earning and skilled workers — would receive a cash gratuity of between R1,352 and R1,695 (see table below).

In a briefing with media on Monday 5 July, DPSA Minister Senzo Mchunu said the government’s offer to trade unions was “reasonable”. “We may not say it is all that the unions were looking for, but it would be extremely hard for us to say this [the offer] is very little amid the difficulties in [the economy],” said Mchunu. 

“We need to resolve the [salary impasse] crisis. It’s not good for us in government and labour, as leadership, to be seen to be seized with problems in a non-ending way, as has been done.”

Although the government has sweetened the cash gratuity offer, it has reiterated that it will not offer public servants inflation-beating salary increases. At the PSCBC, where the government and trade unions negotiate the terms of employment in the public sector, the former didn’t budge on its 1.5% salary adjustment offer. The government presented the 1.5% as a final offer to trade unions. 

This is the latest twist in the merry-go-round of negotiations between the government and trade unions, which have been going on for more than a year without a resolution.  

Trade unions have not yet decided whether to accept the government’s new offer.  Federations such as Fedusa and Cosatu itself cannot accept or reject the government’s offer because it is not a member of the PSCBC. The unions have agreed to consult their public servant members about the offer and plan to return to the PSCBC on Tuesday to decide on the way forward. 

The PSA, which claims to represent more than 230,000 public servants, told Business Maverick that it was not part of the PSCBC negotiations that resulted in the government revising its cash gratuity offer. The PSA has walked away from discussions at the PSCBC and threatened to go on strike if the government doesn’t accede to its demand for inflation-beating salary increases. The trade union has subjected its members to a ballot on whether to embark on a strike in line with the Labour Relations Act. 

The compensation of public servants weighs heavily on the fiscus. The Treasury wants to reduce its expenditure on compensating public servants by R300-billion over the next three years. To do this, the government wants public servants to accept a three-year salary freeze. At R650.4-billion in the 2021/22 financial year, expenditure on paying public servants is the largest component of the government’s overall expenditure. It accounts for around 35% of government expenditure.  

Credit rating agencies have cast doubt on the government’s ability to convince public servants to accept a salary freeze after being awarded inflation-busting increases over the past decade. 

About the government’s ongoing negotiations with trade unions, credit rating agency Fitch said in May: “Compensation of public-sector workers accounts for a large share of government expenditure. Ongoing negotiations on a new wage deal are likely to be difficult and the government is unlikely to meet its target of agreeing on a wage freeze, leading to the risk of expenditure overruns.” DM/BM

Article amended to include Mchunu’s comments.

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    • In government pay probably the gratuity is not part of pensionable salary.

      I wonder what their average salary is if the 1.5% increase plus the extra R1500 per month is not above 5% inflation? Roughly R40,000 per month on quick calculation?????

      No wonder they all seem to need to lose 25kg per the protest pictures. Nobody hungry there…

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