Serious dangers of ignoring ability to pay and setting a bench-mark for the private sector.
Natasha Marrian’s article Public service pay rises 7%, with index-linked increases in later years was first published in Business Day today and by kind permission here are some extracts. Read the full article by clicking on the link or going to Business Day itself.
“PUBLIC servants will receive a 7% salary increase after trade unions and the state signed a three-year pay settlement last night, the Department of Public Service and Administration said.
While Finance Minister Pravin Gordhan had budgeted for a 5% wage hike, unions entered negotiations demanding 10%.
The state’s last informal offer of 6.9% already increased the wage bill by about R8bn.
Last night’s settlement brings to an end the protracted and at times acrimonious negotiations, during which a new minister took the helm of the ministry.”
“The three-year agreement stipulates that public servants would receive a 7% increase for 2012, and from 2013 to 2015, workers would receive the consumer price index plus 1%.
The 7% increase would be backdated to May, and would apply until March 31 next year. The following year’s pay progression takes effect from April 1 2013 and April 1 2014 respectively.”
“Despite having accepted the proposal, Mr Maluleke said unions ‘gave in’ on the housing allowance and the date of implementation of the agreement.”
State plans to get value for its money, says Sisulu
Natasha Marrian’s report first published in Business Day yesterday, extracts by kind permission of Business Day but entire report should be read by going to Business Day or clicking on the link.
“The state was paying an additional R17.1bn on its wage bill after an agreement for a 7% wage increase with public sector unions for the year, and was planning to get value for its money, Public Service and Administration Minister Lindiwe Sisulu said yesterday.
The state’s bloated wage bill, which stood at R317bn with the increase, was unsustainable given the rate of economic growth, but the multiyear wage agreement saw the state and labour reaching a considerable compromise.”
“The three-year agreement, said Ms Sisulu, would allow the state to plan ahead, and in the next round of negotiations, in 2015, it would ensure that the government was better placed to ‘ensure that we can get value for money from what we are negotiating. We have given in good will the 7%, laying a basis for workers where we can actually now demand that we will have value for money,’ she said.
The state had made a commitment to assess the salary structures, starting with teachers. Ms Sisulu said once salary structures were corrected, the government could put pressure on its workers to perform.
However, the status quo on wage negotiations would remain; it would not be linked to the performance or the productivity of workers. ‘My job as minister is to ensure that we get that quality of work that we expect. The productivity that we expect is actually cemented in the public service itself … so if we can do more it has nothing to do with the wages’.
A service charter or accord would be signed by the end of next month to ensure that service improved. ‘This kicks off a very important journey that we now need to take with public servants. Together with the public servants we need to say to the country that no more would we have to endure bad service,’ she said.
Unions negotiated on behalf of nurses, teachers, doctors, police officers and a range of other public sector workers.”
“The chief negotiator for the state, Melissa Ntshikila, said the focus during the negotiations — which the minister described as ‘difficult and protracted’ — was on meeting workers’ financial needs, but also to assert the employer’s right to fulfil its role to provide improved services to the citizens of the country.
After three years, when parties head back to the negotiating table, the state would examine its progress over that period.
‘If employees want to make demands, this must be born out by the productivity that is very clear in terms of the work that they are performing, so we would want to say to teachers if the argument is that you are not being remunerated, we will do all of those things. In return, these are the kinds of expectations that we have,’ Ms Ntshikila said.
‘If we see employees are not performing, they have to be held accountable for that. If they are performing, then there must be no reason why those workers should not share in the productivity gains’.”
Rating firms welcome three-year public sector pay deal
Mariam Isa’s report first published in Business Day yesterday, extracts by kind permission of Business Day but entire report should be read by going to Business Day or clicking on the link.
“News that the government has clinched a three-year pay settlement with public servants has been cautiously welcomed by global rating agencies, which said the pact had removed uncertainty about public finances in the medium term.
Analysts were also pleased that pay increases would be fixed at levels seen as reasonable over the next couple of years, removing the risk of disruptive public sector strikes.
There has been mounting concern over the cost to the economy of public sector wages, which have ballooned to more than a third of the government’s overall spending over the past few years. Rating agencies have repeatedly warned that the trend could threaten SA’s credit rating, which helps to determine its cost of foreign borrowing and affects investor appetite for local assets.”
“The most important aspect of the deal is the fact that it stipulates wage increases will be set at one percentage point above the projected consumer inflation rate over the next two financial years. Inflation is likely to be below 6% during the period.”
“The Treasury’s national budget in February allowed for R336.96bn in compensation for employees in fiscal 2012-13, which is 33.5% of consolidated national, provincial and social security funds spending. In the previous year, it was R314.9bn, or 33.9% of comparative expenditure.”
“The Treasury said yesterday that the wage deal was about R6.9bn higher than what was budgeted for this year and would be funded largely from cuts in noncore areas of spending and the contingency reserve.”