Unions to clash with govt over public sector wage hikes

Nehawu members march to Parliament in Cape Town. (Jenni Evans, News24)
Nehawu members march to Parliament in Cape Town. (Jenni Evans, News24)

Johannesburg - The National Union of Health and Allied Workers Union (Nehawu) is set to embark on a collision course with government on Thursday, as it readies to announce public sector wage demands in the double digits.

The union is expected to announce it is seeking a one-year agreement with the state and changes to housing allowances at a press conference in Braamfontein, Johannesburg on Thursday morning, according to a document seen by Fin24. This follows its national executive committee meeting last week. 

Nehawu is the largest Cosatu affiliate, together with other public sector unions within the ANC labour ally. The joint opening demand that they table will represent more than 50% of workers in government.

The Public Service association, affiliated to the Federation of Trade Unions of South Africa, revealed its wage demands last month. It is seeking increases of 10% to 12% as well as a one-year wage deal.

Finance Minister Malusi Gigaba warned at the press conference ahead of the medium-term budget last week that the negotiations period will be difficult. “We do recognise that the compensation of employees raises a fiscal risk.”

Gigaba wouldn’t be drawn into the figure the government team will be tabling as an opening offer at the Public Service Coordinating Bargaining Council, but said unions should act in the public interest as South Africa’s debt-to-GDP ratio is expected to rise to 60% in the next three years. 

”I think the unions are also quite alive to the challenges we are facing,” he said.

Treasury in the 2017 mini budget for the first time published a compensation annexure. This showed the public sector wage bill amounts to 35.3% of consolidated expenditure, and provincial departments of health are spending 50% to 70% of their total budgets on remuneration.

The table reveals the public sector wage bill amounts to 35.5% of consolidated expenditure

Government has forecast a 7.3% wage increase across the public sector for the next three years, to keep expenditure within the fiscal ceiling.

The PSA however already warned that unions will not back down from their double-digit demands and blamed South Africa’s economic difficulties on the government, citing the two Cabinet reshuffles this year, the subsequent downgrades by ratings agencies and state capture claims as own goals.

In 2015, government and unions agreed to a 7% pay hike, plus a 1% increase for the next two years The negotiations period was stormy, with unions withdrawing and threatening to strike several times.

Compensation spending as a share of total expenditure

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