Cape Town - In the early hours of Friday morning, Cosatu unions which represent 52% of public sector employees signed a controversial new three-year wage deal.
While the new agreement gives the workers the 7% wage increase initially agreed and reneged on by government, it pegs future pay rises to Treasury estimates of inflation.
“So what this means is that if inflation is greater than 4.8% this year (the Treasury estimate), increases next year will be based on this with no clawback,” said Leon Gilbert, spokesperson for the PSA, largest of the independent labour unions.
“And inflation is already above that figure.”
The pay talks followed the government’s decision to reduce the initially agreed wage increase to 6.4% in order to “claw back” 0.6% overpaid in the final year of the previous three-year agreement. They began on Thursday night and continued until 02:00 in the morning.
When the meeting began, the demand by the combined unions was for the 7% to be reinstated and for the agreement which pegged future increases to actual inflation to be honoured. Government negotiators finally agreed to the 7%, but only on condition that the clause on inflation be replaced by one which has pay rises determined by Treasury estimates.
“This is unilateralism, and Treasury has been so wrong in the past with their estimates,” said Independent Labour Caucus chair Basil Manuel.
“Most economists conservatively estimate that inflation this year will be at 6%,” said Gilbert. “This means that next year, public sector employees will lose 1.2% on their pay rise because they are stuck with the 4.8% Treasury estimate.”
He added: “And if inflation even goes to 15%, we will still be stuck with pay rises based on 4.8%.”
However, the Cosatu unions have argued that the reinstatement of the 7% is a victory. They will announce the agreement at a press conference scheduled for 11:00.
“Most workers are not going to be happy with this and those Cosatu unions who are poaching members from the public sector will have a field day,” one of the negotiators predicted.