Public Service Wage Agreement

Coovadia said proposals to reduce the wage bill were welcome, “otherwise we will have to ask ourselves how they will be funded.” The survey showed that wage expenditure rose from R154 billion in 2006-7 to R518 billion in 2018-19, an inflation-adjusted increase of 78%. The result is a real increase in average earnings of 44% over this period, or 3.1% per year. An independent study commissioned by Business Unity SA (BUSA) showed that the salaries of public sector employees were high, both internationally and in the private sector. This week, a day before the government clashed with public sector unions before the Labour Appeals Court, the Department of Public Service and Administration attempted to postpone the hearing to reach an agreement. Unions have opposed it after months of litigation to ensure that the case in which they are trying to enforce their contractual rights has been tried. Given that the average annual remuneration of the public sector more than tripled between 2007 and 2020, resulting in a real increase of 45%, wages currently generate about one third of the budget, with the obvious effects on the provision of services and investments. Michael Sachs, a professor at Wits University and former head of budget at the Ministry of Finance, called it “austerity without consolidation,” where the government cuts primary spending while accepting pay rises for civil servants above inflation. It is a bad economy and morally unjustifiable, although this last point has been lost to trade union leaders who see their role in the narrowest sense. There is no place for the country. There is clearly a problem here, and the Treasury cannot be blamed for trying to manage it after years when the government did not have the backbone, or rather, in the case of the Jacob Zuma administration, it was a willing participant.

Lawyer William Mokhari SC, who represented Nehawu, said the government had not approached the unions to renegotiate the implementation of the agreement, but simply said the agreement was not valid. But the unions argued that the employer`s challenge was that they were negotiating with various means to save money to raise money from wage increases, and now that the government had not, it wanted workers to bear the main burden of their challenge. It also turned out that the country`s public service is not important per capita, but that public servants are exceptionally well paid. Busa`s CEO, Cas Coovadia, said there was no “optimal” size for the public service. The October Medium-Term Fiscal Statement detailed that compensation spending on public services had increased over the past 15 years at an unsustainable rate, nearly 1.5 percentage points faster than GDP growth, mainly due to higher compensation. That is an important point. The bill did not go up because the government put in place much-needed doctors, nurses or teachers, but because it diverted more resources from the country to those who were lucky enough to already have a job in the public service. The outcome of the case will be crucial for SA and its unions in the public sector, as it focuses on a number of critical issues, including the disqualification of collective bargaining.

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