Government rejects 10% pay hike demand by public sector trade unions
Instead of agreeing to a 10% pay hike, the government has proposed it continues to award SA’s 1.2 million public servants an after-tax cash gratuity of R1,000 a month in 2022, which would cost the fiscus R20.5bn.
The government has rejected the demand by public sector trade unions for a 10% pay hike in 2022, which would cost the fiscus R49.2-billion to implement, saying it is unaffordable and exceeds its current budget to remunerate public servants.
But the government is still committed to negotiating with trade unions, proposing that talks about their above-inflation pay hike demand be deferred to the next round of negotiations, covering the 2023/24 fiscal year. This round of negotiations is set to start in July and end in September 2022.
The government has formally responded to the trade union demands, which were tabled in early May at the Public Service Coordinating Bargaining Council (PSCBC), where both parties negotiate the conditions of employment in the public sector. Public sector unions are still consulting their members and will formally respond to the government’s refusal to accept their demands at the PSCBC on 31 May.
Instead of agreeing to a 10% pay hike, the government has proposed that it continues to award SA’s 1.2 million public servants an after-tax cash gratuity (or bonus) of R1,000 a month in 2022, which would cost the fiscus R20.5-billion.
The National Treasury has budgeted for the cash gratuity in its 2022/23 expenditure framework and was always prepared to extend it for another year if it didn’t agree with unions about their remuneration demands.
Business Maverick has obtained a document, tabled at the PSCBC, which details the government’s response to each of the trade union demands. In the document, the government said it proposes that the current dispensation of the cash gratuity for 2022/23 should continue as “any cost on the baseline would significantly disrupt the tabled fiscal framework”. In other words, the Treasury has not budgeted for a 10% pay increase in the current fiscal year because it is still committed to not awarding public servants an inflation-beating pay hike. Inflation measured at 5.9% in April, according to Statistics South Africa.
The Treasury wants to wrestle down the cost to remunerate public servants because, at R682.5-billion in 2022, it gobbles up 34% of the government’s total expenditure. Cutting the public sector remuneration bill will also pave the way for the government to reduce its ballooning government expenditure and debt.
In addition to the cash gratuity, public servants will receive a 1.5% pay hike, known as “pay progression”, which is ordinarily awarded to public servants for their years of service or performance. The pay progression is always pencilled in by the Treasury in the public sector remuneration structure.
The government said it is prepared to adjust the pay of public servants but it is only willing to accept proposals that don’t cost more than the R20.5-billion it has budgeted for during the 2022/23 fiscal year.
Public sector trade unions, including the Public Servants’ Association (PSA), have interpreted this undertaking as the government being prepared to withdraw the cash gratuity and use the R20.5-billion to fund pay hikes that are below inflation. “This might not be favourable as it would reduce cash in the pocket for many employees,” the PSA, which claims to represent more than 235,000 public servants, said in an alert to its members.
Other trade union demands include a R2,500 increase in the housing allowance afforded to public servants, the introduction of a bursary scheme for their children, relief funds for disaster periods such as Covid-related lockdowns, and measures that allow public servants to easily access pension savings if they fall on hard times.
The government has rejected all demands on grounds that they are either unaffordable or it would be an administrative nightmare to implement. DM/BM