State gears up for wage war

2014-10-05 15:00

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Sixteen public sector unions jointly agree to shift their attention to the lowlier jobs in a shake-up of the state’s pay scales

Public sector unions want another shake-up of the state’s pay scales, and are asking the government to pay its unskilled workers massive premiums on going rates in the private sector.

Among the demands tabled with the Public Sector Coordinating Bargaining Council (PSCBC) this week is that the bottom three rungs of the state’s 12-level salary hierarchy get rolled up into level four.

That amounts to eliminating all remnants of relatively low pay in the state and could be a far more important demand than the headline “across the board” opening demand for a 15% salary hike next year.

Manie de Clercq, deputy general manager of the second-largest public sector union, the Public Service Association, said that anything between 300?000 and 400?000 state employees fall into these bottom categories, including cleaners and porters.

Levels one and two pay salaries between R70?000 and R86?000 a year. Level four will likely start at more than R110?000 (R9?166 a month) after this year’s wage round.

If the unions do pursue and win this demand, it would boost the lowest salaries by more than 50%.

Unskilled wages in the private sector can be as low as R2?500 a month in sectors covered by sectoral determinations and R4?500 and less in formal sectors where unions are active.

This move to flatten the inequality at the bottom of public service comes after the PSCBC unions spent most of the past decade fighting government on the Occupational Specific Dispensations, which mostly affect the middle and higher tier above level five.

In 2007 and again in 2010 general public sector strikes were called and the 2010 one is still considered, by far, the largest strike in South African history.

The negotiations in that period revolved around the changing of salary “notches” through the Occupational Specific Dispensation, giving civil servants improved pay by having their job descriptions change.

Now it seems the 16 unions have jointly agreed to shift their attention to the lowlier jobs. The wage demand of 15% is the same as opening demands in the private sector this year, particularly the metals and engineering sector.

Unions also demand a massive increase in the state’s housing allowance, from the current R900 to R3?000 a month, after having taken a decade to get it pushed to current levels from an initial R400.

The PSCBC’s inflation-linked wage deals have been between 6.8% and 7% since 2009.

Since the economic crisis, the government wage bill has grown by on average of 12.6% a year. The difference reflects the hiring of more employees – and the pay hikes resulting from the Occupational Specific Dispensation.

The talks that have now begun are “prenegotiation” and are meant to thin out demands before real negotiations, which involve the possibility of protected strikes, begin. The PSCBC hopes to have a deal signed before the end of the year.

The current wage deal only lapses in April next year, but ideally Treasury would want to know what it is up against when it prepares the budget review for the end of February next year. As things stand, the PSCBC talks will already take place under constrained conditions.

Economic growth this year is far below Treasury’s budget projections in February, meaning less taxes and less money for salary increases.

At the same time, the wage budget of R440?billion for the year to March 2015 set by Pravin Gordhan in his last budget review will almost certainly be exceeded.

It was premised on a salary hike of 6.4% this year.

Instead, it was 7.4%, following the terms of a three-year deal in 2012 that guaranteed inflation plus 1%.

Apart from the PSCBC wage talks, the commission of inquiry into remuneration and conditions of service in public service and public entities is still ongoing.

President Jacob Zuma appointed the commission in August last year. Initially, it had eight months, but that has been extended to April next year.

The commission’s terms of reference mostly relate to critically interrogating the inefficiencies and potential unsustainability of the state’s wage bill.

Public sector wage deals are virtually always inflation-linked, usually with a relatively small percentage on top of the reigning inflation rate.

Since the PSCBC was created in 1998, entry-level wages in government have increased from R19?002 to R67?806 a year (see table).

In real terms, adjusted for inflation, the improvement was still spectacular – a doubling of the lowest salaries and a 160% real improvement at the high (level 12) end of the scale to R743?076 today.

But these figures are misleading because the Occupational Specific Dispensation has introduced a massive fragmentation in salary levels for every specific occupation.

The result is that government’s wage tables take up almost 100 pages with salary notches prescribed in finite detail for everything from town planners and scientists to ambulance drivers and social workers.

The salaries in question range from R5?000 a month to more than R100?000.

Who is at the table?

There are about 16 public sector unions representing 1.3?million workers in the top two levels of government - national and provincial, but excluding municipalities.

The bulk of the workers are teachers, police officers and health workers.

Teachers’ union Sadtu is the largest with more than 250?000 members, followed by the non-Cosatu Public Service Association with 212?000 members.

Cosatu’s general public service affiliate Nehawu has 180?000 members, and police union Popcru has about 150?000 members.

The government wage bill

The South African government employs nearly 2?million people across national and provincial departments, municipalities and other state-owned entities.

This colossal workforce now costs roughly R440?billion a year – 35% of the entire national budget – and has been the backbone of household income in the lean years since 2009.

In the core national and provincial departments, there are roughly 1.5?million people.

Despite commonplace perceptions that the civil service has ballooned out of proportion since 1994, it has really only grown by 25%.

Most of that growth was in the past six years as the state has kept the crisis-stricken economy going by hiring and paying well.

Up to 2005, the civil service was actually smaller than in 1994 as the fiscal discipline of the Growth, Employment and Redistribution strategy years and the redundancies caused by merging the old white state with the bantustans were eliminated.

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