If you thought the Eskom strike was debilitating, what’s looming on the horizon will make it look like a children’s tea party. This review by South African Market Insights paints a picture of government dysfunction and bad faith at the negotiating table – the opposite of the popular narrative that unions are taking advantage of the general chaos to squeeze their employer. There has been slow to no wage growth for public service employees for the past three years and government has broken a solid 2020 agreement with them. Who starts negotiating by putting a 0% rise on the table? Our government it seems. Who then offers a hike way below inflation? Again, our government. For three years the unions have swallowed hard and are now thoroughly peeved. This is a perfect post-Covid cocktail for a nation-wide strike. Pound-wise and penny foolish, could cost us hugely. It seems our leadership is so busy fighting internecine party battles that they’ve forgotten how to govern. – Chris Bateman
Is there a big public service strike looming in South Africa?
We ask the question whether there is a big public service sector wage strike looming. In recent years due to Covid-19 there hasn’t really been a large scale public service sector strike. But with regulations lifted and wage talks stalled. Will unions that represent public service employees decide to strike? If so it could bring all government services to a grinding halt.
And with the significantly increasing cost of living in South Africa and slow to no wage growth for public service employees over the last 3 years we could well be in for a massive strike.
Now before you read this and think oh great another strike by government employees who are overpaid and don’t deliver any services. Just take a moment to consider the following. They also have families to support, bills to pay and ends to meet. And since the onset of Covid-19 in South Africa government employees were expected to be at the front line of dealing with the pandemic, while at the same time government put the interest of their employees on the back burner.
In 2020 government failed to meet their side of a 3 year wage agreement, as they claimed there were no funds available to pay the wage hike they agreed to and signed for in the 3 year wage agreement. Government won a court case that ensued because of the wage agreement on a technicality. And that is the Department of Public Service and Administration (DPSA) never got written confirmation when the deal was signed from the Minister of Finance that funds are available for this agreement. While this might be a valid point we cannot see that the DPSA went to the negotiating table without knowing what Treasury was willing to spend on wages over a 3 year period.
So essentially in 2020 no wage increase was paid to government employees. Come 2021, government paid their employees a 1.5% increase in their Cost to company (CTC) and a R1000 after tax gratuity per month. The R1000 after tax however does not form part of a baseline increase, so government employees pension fund contributions only increased by the 1.5%.
The R1000 gratuity can be taken away by government at any point. In fact they apparently overpaid their Senior Managers by 1 month (it was only supposed to be paid from April 2021 – March 2022) and they accidentally paid it for April 2022 as well. So government are now demanding that their Senior Management Service (SMS) members pay the R1000 back. That is fine and well, but why not keep it running as they doing with all the other members of the public service on lower salary levels. And you really want to take R1000 away from employees now when the cost of everything is skyrocketing?
Due to government not sticking to their end of a 3 year wage agreement, unions are now demanding single term (1 year wage agreements). Government agreed in principle to this if an agreement could be reached by June 2022. No agreement has been reached. And it’s no real surprise why no wage agreement was reached.
Government started the wage negotiations by offering 0% while the unions demanded 10%. Largely due to the fact that over the prior two years employees employed by the state received well below inflation increases. So their demands is well above the current inflation rate, but its due to wage increases in the prior years were well below inflation.
After some deliberations government offered a 4.5% increase in their CTC and doing away with the R1000 gratuity. But taking away the R1000 a month will hurt the pockets of the lower level employees as a 4.5% increase will not amount to R1000 after tax for lower earning employees. So unions declined the offer as the bulk of their members will get less cash out if they agreed to the offer.
Since then there has been multiple wage talks with government revising an offer by keeping the R1000 and giving a 3% increase (part of the 3% is a standing 1.5% increase government employees get to compensate for government salaries lagging behind private sector counterparts, especially when considering bonuses, share incentives etc that government employees do not get). So technically government only offered a continuation of the R1000 and a 1.5% increase, with the other 1.5% already forming part of agreements reached years ago. So basically only a continuation of a 1.5% that government has known about for years and should have been budgeting for years.
As a last ditch attempt to save the negotiations government asked unions if they would be willing to accept a 3% cap on wage hikes. Which of course was rejected as they lowered their demands to 8% or at least CPI, which is sitting at 6.5%, but expected to increase sharply in coming months due to higher fuel prices. And this will surely lead to higher interest rates. All putting a squeeze on government employees pockets. And all expected to return to their offices full time. So transportation costs hitting their pockets hard. No hybrid working arrangements here.
From April 2020 to April 2022, according to the CPI, inflation has increased by 10.5%, yet government’s latest offer is only offering an increase of 3% (based on their question on whether unions will accept a 3% cap).
So with negotiations stalled, unions still having a bitter taste in their mouth due to government not making good on a wage agreement they were party to and signed, an employer demanding a full time return to the office with no hybrid working arrangement option, an employer offering far below inflation increases for the coming year and the past 2 years all adds to a lethal cocktail which could see a massive strike in the public sector which could potentially bring all government services to a halt.
And with a hand full of Eskom employees that striked managing to squeeze Eskom for 7% we have no doubt public service unions have noted this and will be looking to eke out similar gains for their members. Adding more fuel to unions fires is the fact that government tax collections so far this year is almost 12% higher than the year before. Adding more ammunition for union members to demand more than the 3% that is being offered.
If government doesn’t step up and resolve the impasse in wage negotiations soon we could see a repeat of what happened at Eskom, only on a much larger scale as there are well over 2 million people working for the government in some way, shape or form.
Read also:
- President Ramaphosa: The view that SA’s public service is bloated is ‘misplaced’
- NP outperformed the ANC on every given service delivery, hands down – John Kane Berman
- Eskom cannot meet union wage increase demands
