A municipal worker walks through a waterlogged parking area after heavy rains. File photo: THE TIMES
A municipal worker walks through a waterlogged parking area after heavy rains. File photo: THE TIMES

The government clinched a three-year wage agreement with its 1.3-million workers when six unions affiliated to the ANC agreed to its terms, averting the risk of a national strike.

The deal will see public servants getting raises of 6%-7% for the year to the end of March 2019 and by as much as one percentage point more than the consumer inflation rate for the following two years. The conclusion of the pay talks after 10 months of negotiations is a boon for President Cyril Ramaphosa, who is under pressure from investors and ratings companies to stick to budget-deficit targets.

Containing the salary bill is essential if the Treasury is to meet its target of trimming the budget deficit to 3.6% of GDP in the next fiscal year, from 4.3% in 2018.

Besides securing inflation-beating increases, the unions won a number of concessions, including an agreement from the government that it would not freeze vacant posts, Mugwena Maluleke, the Cosatu unions’ lead negotiator, told reporters in Johannesburg on Friday.

Backdated increases The Cosatu unions represent more than half of state workers including teachers, police, health employees, nurses and doctors. Their signing of the pay offer means the government can implement it even though it’s been rejected by the 230,000-member Public Servants Association, which has threatened to go on strike next week.

Public servants last staged a strike in 2010 that dragged on for three weeks before they were awarded 7.5% raises. Three-year settlements were reached in 2012 and 2015 that increased wages by 7% in the first year and inflation plus one percentage point for the next two years. The current pay deal expired at the end of March and any increases will be backdated.

Although the pay increases exceed the inflation rate, which stood at 4.5% in April, they are in line with the government’s spending plans. The state wage bill is projected to rise 7.3% to R587.1bn in the current fiscal year, and by a similar increase over each of the next two years, the budget shows.

Personnel costs account for about 35.2% of total government expenditure.

Bloomberg