South Africa Government Raises Civil-Servant Pay Offer to 5.5%

(Bloomberg) — The South African government increased its pay offer to public sector workers to 5.5% from 5%, as it seeks to end wage talks that began in September.

The latest offer presented at a special council meeting Monday, is “very progressive,” said Claude Naicker, spokesman for the Public Servants Association of South Africa, which represents more than 245,000 workers.

The increase is “their final offer; meaning that they will append their signature to the draft agreement, and what it effectively means, is that it gives the unions 21 days to either accept the agreement or not,” said Naicker.

Frikkie de Bruin, general secretary of the Public Service Co-ordinating Bargaining Council, wasn’t immediately available to comment. 

Although the offer is a climbdown from workers’ opening demand of 12% for the fiscal year that begins April 1, it is significantly higher than South Africa’s 2.9% inflation rate and the reserve bank’s 4.5% target for anchoring price expectations.

To control its finances, the government wants to link public sector pay increases to the consumer price index for the two years after 2025-26. The draft agreement allows increases to be set at 4% should inflation fall below that level in the outer years, or below 6% if consumer prices exceed that rate.

“Hopefully the other unions sign. The employer is not going to go any higher than this,” Naicker said. “We think under the circumstances it’s a reasonable offer, coupled with the other things like the housing allowance.”

The latest offer may pose a threat to Finance Minister Enoch Godongwana’s ambitions to rein in spending and consolidate South Africa’s worryingly high levels of debt. He is set to present the national budget on Feb. 19.

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