Excessive pay hikes on the way

2010-10-22 00:00

EXCESSIVELY high wage settlements in the public sector have begun to drive the wage expectations of private sector workers, despite the difficult economic conditions.

This means that the economy will be plagued by excessive wage hikes and intensified public and private sector industrial action for some time, according to labour economist Dr Andrew Levy.

Levy was the invited speaker at an event hosted by Express Employment Professionals at the Stay Easy Hotel in Pietermaritzburg yesterday.

He said the latest wage round in the public sector was characterised by bitter negotiations and strikes.

“The average wage settlement should be around six percent to 6,5%, rather than eight percent, which is where it might settle at the end of this year.

“I hear no solutions from the government regarding the issue of ‘fair position in the pay league’ in the public service or the wage structure problems. We will continue to have strike action … and higher levels of settlements than should be the case under the economic circumstances.”

Levy said that unlike the private sector, the public sector is not bound by the profit motive.

“They can implement a higher wage settlement and get the revenue back from taxpayers.

“This is not the case in the private sector. The wage round in the public sector, which is a key negotiation, sets the standard for other sectors. That [the public sector settlement] becomes the settlement marker for the private sector and everybody says, ‘We want some too’.”

Levy pointed out that the government’s wage bill has ballooned over the past three years, and added that the rate of absenteeism in the public sector remains far too high.

He explained that the “very high” public sector wage settlement in 2007 marked the starting point of this trend, which was driven partly by rising consumer price inflation that threatened the public’s buying power.

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