Business Maverick

Business Maverick

In a U-turn and defiance of a remuneration freeze, the government offers public servants a 4.5% pay hike 

Public sector workers protest in Cape Town. (Photo: EPA / Nic Bothma)

Realising that rejecting the demands of public sector trade unions would anger them and potentially lead to a strike induced by a deadlock in pay talks, the government made an abrupt U-turn on its remuneration stance.

The government has tried to smooth ongoing remuneration talks with public sector trade unions by tabling a range of U-turn proposals, including awarding South Africa’s 1.2 million public servants a pay hike of 4.5% in 2022. 

Trade unions representing public servants have formally responded to the government’s decision to reject their pay hike demand of 10% during the 2022/23 fiscal year at the Public Service Coordinating Bargaining Council (PSCBC), where both parties negotiate the conditions of employment in the public sector.

The government said it couldn’t afford to offer trade unions a pay hike of 10%, which would cost the fiscus an additional R49.2-billion to implement, and committed to not awarding public servants an increase – not even one linked to consumer inflation. 

Instead of agreeing to a 10% pay hike, the government has proposed that it continues to award public servants an after-tax cash gratuity (or bonus) of R1,000 a month in 2022, which would cost the fiscus R20.5-billion. National Treasury has budgeted for the cash gratuity in its 2022/23 expenditure framework, but the 10% pay hike wasn’t. 

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 Treasury in the remuneration structure for public servants including nurses, doctors, teachers and police officers.

A U-turn by the government

Realising that rejecting the demands of trade unions would anger them and potentially lead to a strike induced by a deadlock in pay talks, the government made an abrupt U-turn on its remuneration stance.

Business Maverick was informed by two senior trade union officials, who are party to PSCBC discussions, that the government tabled a range of proposals that involve the latter offering a substantial pay increase (more than intended) to public servants and other remuneration benefits. 

Trade unions, including the Public Servants Association (PSA), which claims to represent more than 235,000 public servants, have rejected all of the government’s alternative proposals, insisting on the 10% hike.

The first option that the government has proposed is the continuation of the cash gratuity for another year, which was always a safe option to implement if it didn’t agree with public sector trade unions about their remuneration demands. 

The second option involves the government offering a 4.5% pay increase for public servants across the board, regardless of their employment, pay level or number of years in service. This was rejected by trade unions, saying it is below the consumer inflation rate, which measured at 5.9% in April 2022, according to Statistics South Africa. 

That the government is even considering a 4.5% pay hike is curious for one reason: it goes against the government’s commitment to freeze pay increases in the public sector for three years, initially announced by then finance minister Tito Mboweni in 2020 but which ends in 2023. 

In implementing a pay freeze in the public sector, 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 expenditure and debt. 

The third option the government tabled at the PSCBC involves a sliding scale of pay hikes, ranging between 3.5% and 6%, with the lowest-paid public servant receiving a higher percentage while the highest-paid receive the lower end of the percentage. 

In another scenario or option, the government has proposed a 15.4% pay increase for the lowest-paid public servants. But public sector unions have rejected this, saying other remuneration benefits would water down the percentage increase to below inflation levels. 

The unions said this percentage is lowered considering that the government has rejected other proposed remuneration benefits, including 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.  

In an alert to PSA members, the trade union said the government was only prepared to offer the cash gratuity and equated it into pensionable and taxable increases for public servants. 

“It has not given any [pay] increase… It is therefore clear that what the employer proposes on the baseline will have a detrimental impact on members. Labour emphasised the importance of the gratuity and, in addition, an improvement on the pensionable increase for all salary levels,” the PSA said. 

The trade union has demanded that the government go back to the negotiating table and revise its offer “to improve the conditions of service of employees”. It told its members: “Failure to provide a revised budget will make it difficult for parties to find one another.” 

However, the unions are still open to cordial discussions with the government instead of embarking on a strike that would shut down public services including policing, public education and health. DM/BM

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  • Geoff Krige says:

    Why is the government worried about a Public Sector strike? In reality we live under perpetual Public Sector strike conditions. The teachers don’t teach. The police don’t police. Home Affairs does nothing other than cause headaches for law-abiding citizens who need documents for some reason. Traffic Departments stand at the road collecting bribes. So what actually changes if we have a Public Sector strike?

  • Nick Miller says:

    Would anyone actually notice if so called “public servants” went on strike!

  • Johan Buys says:

    “ R1,000 a month in 2022, which would cost the fiscus R20.5-billion” It seems we now have 1.7m government workers, up VERY significantly from the 1.2m I recall in budget speeches???

  • Nicholas De Villiers says:

    ANC clearly terrified of losing union support. They know they’re toast in 2024 and they’re emptying our coffers to try to hang on to power.

  • André Pelser says:

    235,000+ overpaid public servants hold a profligate government to ransom while the economy flounders, crime is rampant and everybody but politicians and public servants are struggling to survive! The ANC government has created this dystopian society, the waste of state resources for power and self enrichment continues.
    An intolerable state of affairs.
    Geoff and others above are right, time to call the strikers bluff.

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