The government has sweetened its pay rise offer in 2023 to public servants to break an impasse that has persisted for months and led to an indefinite strike that has disrupted crucial services at state facilities in recent days.  

The government kick-started pay rise negotiations in February by offering SA’s 1.2 million public servants an average increase of 4.7% for its 2023/24 fiscal year, followed by adjustments in 2024/25 and 2025/26 that are linked to the expected consumer inflation rate. But trade unions representing public servants overwhelmingly rejected the government’s offer and even snubbed its invitation to return to the negotiating table.   

Public sector trade unions have, instead, demanded a pay rise of 10% for 2023. They also embarked on a week-long strike that affected services in some of South Africa’s big hospitals, an attempt to force the government’s hand in acceding to their demands, which include a monthly housing allowance of R2,500.   

The strike — mainly by healthcare workers belonging to the National Education, Health and Allied Workers’ Union (Nehawu) — ended after the Labour Appeal Court ordered workers to report for duty. 

Read more in Daily Maverick: “Labour Appeal Court orders Nehawu to inform members of strike interdict or face legal consequences” 

Nehawu and other trade unions are disgruntled about the government’s decision to unilaterally implement a below-consumer inflation pay increase of 3% in 2022, while they demanded a pay rise of 10%, saying their public servant members were battling to survive a rapidly rising cost of living. They also argued that the government cannot start negotiations for its 2023/24 fiscal year when their 2022 demand for a 10% pay rise is still outstanding.  

But on Tuesday, the government and Nehawu announced that they had reached an in-principle settlement to end the strike by healthcare workers.  This means some 274,000 health workers affiliated with Nehawu will be required to report to work. The settlement, a copy of which Business Maverick has seen, also ensures that workers who participated in the week-long strike will not face any disciplinary action.

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Nehawu said the government had agreed “to augment the [pay] increment” for the 2022/23 fiscal year, inferring that the latter might award public servants more money that is backdated to last year. This might cover the difference/shortfall between the 3% increase that the government implemented and the 10% that Nehawu and other unions demanded. 

“The employer has agreed that residual and substantive matters emanating from the 2022/2023 wage dispute related to the cost-of-living allowance shall be tabled and positively dealt with and concluded as part of 2023/2024 wage negotiations,” Nehawu said.

The Department of Public Service and Administration, which is responsible for employment conditions in the state, said in a statement that the settlement with Nehawu paved the way for pay rise negotiations for the government’s 2023/24 fiscal year to continue with all unions and eventually be concluded.

Pay rise negotiations between the government and trade unions for the 2023/24 fiscal year are underway at the Public Service Coordinating Bargaining Council (PSCBC). The PSCBC is where the government and trade unions negotiate the conditions of employment in the public sector. 

But trade unions including Nehawu, Police, Prisons and Civil Rights Union (Popcru), Democratic Nursing Organisation of SA (Denosa), and SA Policing Union (Sapu) boycotted the PSCBC negotiations. They were steadfast in wanting the government to implement their 2022 pay rise demand of 10%. 

The settlement concluded on Tuesday between the government, Nehawu, and other unions, including Denosa and Sapu, will see the trade unions return to the PSCBC discussions.

A special council meeting has been scheduled for the next few days at the PSCBC where the unions will be introduced to the current pay rise negotiations. The special council meeting will also allow the disgruntled unions to discuss their concerns about “outstanding” pay rise demands from 2022. In other words, the government and trade unions will lump together the pay rise demands of 2022 and 2023 at the PSCBC.  

In a separate development, the government seems like it is willing to increase its pay rise offer for 2023 to improve its relationship with unions. According to unions that are part of negotiations at the PSCBC, the government, on Tuesday, increased its pay rise offer from 4.7% to 7% for 2023/24. 

The unions that are part of the PSCBC negations include the National Professional Teachers’ Organisation of SA (Naptosa), the Public Servants’ Association (PSA), the Health and Other Services Personnel Trade Union of SA (Hospersa), the Suid-Afrikaanse Onderwysers Unie (Saou), and the SA Democratic Teachers’ Union (Sadtu). In a coalition, these unions represent about 53.9% of unions recognised by the PSCBC, thus constituting a majority. 

On top of the 7% pay rise offer, public servants would receive an after-tax cash gratuity (or bonus) of R1,000 a month, an incentive scheme that would run for a year from 1 April 2023. Then the government plans to increase the pay of public servants by the expected inflation rate plus 0.5% in 2024/25 and only the inflation rate in 2025/26.

The government has neither confirmed that it has sweetened its offer nor revealed the shape or form of its pay rise offer. Union sources have told Business Maverick that a formal document that spells out the government’s pay rise offer will be available from Friday 17 March because PSCBC discussions are still ongoing and terms of a compensation deal have not been finalised. 

Response to the government’s improved offer 

The response to the government’s sweetened offer for 2023/24 has been mixed in union circles. The renewed offer has prompted some unions to lower their demands from 10% to 8%, bringing all the parties close to reaching a pay rise deal. This is according to the Federation of Unions of South Africa (Fedusa), whose affiliated unions include Hospersa, Naptosa, Saou and the PSA.  

Fedusa said a follow-up meeting would be held soon, “with the expectation that the employer will revert to the response tabled by unions”. 

“We foresee that the negotiations will conclude before the end of the month [March], bringing hard-working public service employees much relief, instead of the norm where talks drag on for months while they suffer the consequences of shrinking salaries. In fact, we may witness a record turnaround time in public sector wage negotiations.” 

But the PSA, which is affiliated with Fedusa, sees the negotiations playing out differently. PSA assistant GM Reuben Maleka said that the union, which represents more than 235,000 public servants, rejected the government’s improved 7% offer. 

“The PSA remains resolute on its mandated demand for a 10% increase. The government’s offer does not consider the escalating cost of living and does not meet the needs of public servants,” Maleka said. 

Economists and credit ratings agencies are closely watching the negotiations around the compensation of public servants because reining in the cost is seen as key to stabilising government finances. It is not clear how much the average 7% increase in the pay of public servants will cost the government to implement. But the government has already budgeted for an increase in its expenditure on the compensation of public servants.  

At a projected R701.2-billion during its 2023/24 fiscal year, the compensation of public servants is the largest component of the government’s total expenditure of R2.24-trillion. The compensation expense is expected to rise to R728.7-billion in 2024/25 and R760.6-billion in 2025/26. DM/BM