A wage agreement between government and civil servants for the 2021/2022 fiscal year will cost about R20-billion, national treasury said on Wednesday.
Government and public sector employees struck a one-year deal last month for a 1.5% salary increase plus a cash payment after several months of negotiations.
Trade unions initially demanded far larger, above-inflation increases. The government wanted to keep salaries flat to rein in a gaping budget deficit exacerbated by the Covid-19 pandemic. But when talks reached a deadlock and unions threatened strike action, the government softened its position.
National treasury said in a presentation before a parliamentary committee that the R20-billion cost was above the compensation ceiling contained in the February budget. “Work is ongoing on how to address the wage agreement within the current constrained environment,” the presentation said.
Government’s wage bill, accounting for about a third of consolidated spending, has been a major concern for credit-rating agencies that have downgraded South Africa’s sovereign debt to “junk” status. — Reported by Alexander Winning, (c) 2021 Reuters