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.”