SA govt’s public sector pay gamble

Posted on April 16, 2018


Workers are always concerned about the level of wage increases. And so they should be, since pay rises usually lag a year behind the rise in the cost of living: pay for the year ahead is usually based on the officially determined increase in the cost of living (CPI) for the previous 12 months or more.

Catch-up is the name of the game and is the reason wage demands are often portrayed in the media as being excessive. This is especially so when the official CPI is around 5% and wage demands are at 10% or more.

But the official CPI averages the purchases of rich and poor using a system of weightings. What this means is that the cost of living increase for the lower paid — especially given the legacy of apartheid geography and the cost of transport — is generally substantially higher than the official rate. There are also often historic wage gaps to be considered.

This is why, even when unions accept the CPI as a base line, they request more than 1% or 2% above this, especially in the case of pay deals that extend beyond a year. Employers argue that a fixed percentage pay rise over a period of three or even five years makes for stability and enables better planning. This is usually a sticking point for unions.

But such matters are resolved through negotiation, through a collective bargaining mechanism that workers have won through years of struggle. Employers interfering with this do so at their peril, but only when unions are relatively strong.

When worker organisation is weak or beholden to the employer, attempts are often made to circumvent collective bargaining and impose wage settlements. This has happened in the past in South Africa, with a deal for the public sector being imposed.

Many workers see this move as having to pay for mistakes, corruption or incompetence that is not their fault. And this is precisely what seems to be happening at the moment, with the government pointing out that it has to deal with “very difficult economic conditions”. Austerity measures are therefore called for.

As part of these measures the government — the biggest employer in the land — has effectively reneged on its own proposals for a settlement with more than 1 million of its employees. Implementation a deal after protracted pay and benefits talks that started in September last year should have been on April 1.

In January, everything seemed on track, but then there had been what amounted to a change in the company boardroom, with Jacob Zuma making way for Cyril Ramaphosa as president and the effective top boss. And when Ramaphosa replaced Faith Muthambi as public affairs minister with Ayanda Dlodlo the unions did not expect it to impact on the proposals on the table.

But Dlodlo tabled a new set of proposals, effectively changing the rules in the middle of the game. “It’s crazy,” says Tahir Maepa of the PSA (Public Servants Association).

This was a clear case of an employer issuing a direct challenge to the unions that amounts to workers having to pay for the current parlous state of the economy. Yet the public sector is quite highly unionised.

However, the government clearly calculated that, because Cosatu and its affiliates supported Ramaphosa in the political battles that ousted Zuma, they might be reluctant to challenge the new administration. The failure to support a PSA call to declare a dispute is evidence of this reluctance.

But there is also growing anger. In coming weeks and months — if not sooner — the government may find it has overplayed its hand.