Business Maverick


‘Trust deficit’ between trade unions and the government to weigh on upcoming public sector wage talks

‘Trust deficit’ between trade unions and the government to weigh on upcoming public sector wage talks
Finance Minister Enoch Godongwana. (Photo: Gallo Images / Brenton Geach)

In wrestling the public sector wage bill down to more affordable levels, Finance Minister Enoch Godongwana wants to restructure how the wages of public servants are adjusted every year. He also wants to audit the skills base and productivity of civil servants to determine if the public sector is fit for purpose.

More than half a trillion rand is spent each year on wages and salaries for 1.3 million public servants. Their pay has tripled in just over a decade. The government says this is unsustainable.

Finance Minister Enoch Godongwana said the government’s upcoming wage negotiations with public sector trade unions will be tougher than usual because trust between both parties has eroded in recent years.

In one corner, there are about 10 trade unions representing public servants that — year in, year out — demand above-inflation wage increases that the government cannot afford. The bargaining position of the unions was weakened after they lost their case at the Constitutional Court in February that sought to force the government to implement wage increases of about 8% in 2020.

In the other corner is the government, which wants to arrest the rising cost of paying 1.2 million public servants including teachers, nurses, doctors and police officers. Since 2020, the National Treasury has been steadfast on a wage freeze for public servants because it wants to slash government spending and bring spiralling state debt under control.

Because of the difference in opinion between the government and trade unions, Godongwana said wage talks for 2022 have the potential to be less than constructive. 

“Over the years, there has been a trust deficit between us and the unions and, as a result, the negotiations have not been constructive. The question facing us is how we can rebuild trust so that we have a common understanding of the challenges facing the country,” Godongwana told Business Maverick on 24 March on the sidelines of President Cyril Ramaphosa’s investment conference. 

Ramaphosa likely to win ANC elective conference and lead a coalition government in 2024 — research reports

Godongwana to review public sector functions 

In tackling the ballooning wage bill, Godongwana wants to review and restructure how the wages of public servants are structured and adjusted every year. 

This will arguably be difficult because, over the past decade, the consumer inflation rate has always been built into the structure of wage adjustments — known as a “cost of living” increase. Up to two percentage points would be added on top of the inflation rate to reach the final wage adjustment rate. The two percentage points would be for pay progression, which is awarded to public servants for their years of service or performance. 

Trade unions have been conditioned to expect and accept this method of calculating wage adjustments. 

Godongwana also wants to audit the skills base and productivity of public servants to determine if the public sector is fit for purpose. 

“The headcount [in the public sector] is not that big. But the problem is that there are wrong people who don’t have the right skills. We have to place people with the right skills,” said Godongwana. He said the cost structure of the wage bill, and what drives it up, “is unacceptable and too high”.

The public sector wage bill has shot up from R154-billion in 2006 to R682.5-billion in 2022. It’s the single largest component of government spending.

The main driver of the wage bill growth has not been an increase in the number of people hired by the state (1.2 million public servants in 2006/07 versus 1.3 million in 2021/22), but rather the remuneration itself, which has been adjusted annually at a rate higher than inflation.

According to National Treasury data, the average take-home pay of public servants has more than tripled between 2006/07 and 2019/20, rising from R136,000 a year to more than R415,000.

Godongwana’s plans to review the skills base and productivity of the public sector are set to be discussed at a Public Sector Labour Summit scheduled for the end of March. The summit will be attended by government officials and labour experts, but not public sector trade unions.

Meanwhile, the Public Servants’ Association (PSA) and trade unions affiliated with labour federation Cosatu told Business Maverick they were in the process of consolidating their wage adjustment demands for 2022.

Reuben Maleka, the acting deputy general manager of the PSA, which claims to represent more than 240,000 public servants, said the unions wanted to show a united front when they formally presented their demands “in the week to come” at the Public Service Coordinating Bargaining Council (PSCBC). The PSCBC is where the government and trade unions negotiate conditions of employment. 

Like Godongwana, the trade unions believe that trust with the government has been fundamentally breached after they lost their recent case at the Constitutional Court. The apex court’s ruling affirmed the government’s right to renege on a collective agreement on wage increases for public servants if it didn’t have money to comply with that agreement. The last leg of a three-year wage agreement was declared unlawful by the court. Read more here. DM/BM


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Comments - Please in order to comment.

  • Jean-Paul Kloppers says:

    The thing about the unions demands for above inflation wage increases is that it doesn’t seem to be linked in any way to quality of service as anyone will attest who needs to get a driver’s license, a visa, drives on roads, uses electricity, uses water, has been pulled over by a metro cop, has to watch said metro cops hand out fines while at the same intersection outsurance staff manage traffic where robots are not working. And so on and so forth.

  • Paddy Ross says:

    Where has Godongwana been for the last twenty eight years? At last, a Minister of Finance who is trying to introduce the unions to the real world where there is no such thing as a free lunch. The public service unions use the plight of doctors, nurses, etc. to try to justify rises for those public servants who do not do an honest day’s work.

    • Richard Baker says:

      Godongwana has been on the ANC’s economic policy committee for many years-so a big part of the bind the country finds itself in.
      He’s no revelation or new champion-just spouts good sounding rhetoric with no real understanding or action.
      All the issues now facing SA were warned about decades ago but the tone-deaf ANC ploughed on with outdated and unworkable ideology.
      The way cadre deployment, transformation, BEE, employment equity, etc have been implemented has resulted in a public service at all levels (national, provincial, municipal) which is unfit for service, overstaffed, overpaid, incompetent and corrupt.
      This is so embedded that to row back on this situation will be impossible as the ANC has proved it has neither the resolve or the power to do so.
      This will be a millstone around the neck of the country for as long as the ANC is in government.

  • Love JHB South says:

    The unions need to go. We need a Maggie Thatcher here.
    If you cannot perform at your job, you shouldn’t have it.

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