Public Sector Unions affiliated to Cosatu have accused government of acting in bad faith in wage negotiations and have warned that workers will act decisively if government fails to improve its wage offer. Government has lowered its annual wage increase offer to 1.3 million public servants to 4,8%. Trade unions are demanding 15%.
These wage negotiations represent a tough test for the ANC lead government which has budgeted a 6.6% increase for civil servants wages this year.
While this is in line with inflation and while civil servants have enjoyed generous increases since 2009, Finance Minister Nhlanhla Nene has warned that the ballooning wage bill is now crowding out other government spending on services and is one of the biggest risks to South Africa’s fiscal stability.
If government fails to stick to the amount it has budgeted for wages rating agencies will take it as a sign that government isn't serious about sticking to its commitment to stabilise public finances. Economists have warned that the economy simply cannot afford another downgrade.
