March 2, 2020 / 8:01 AM / a month ago

UPDATE 2-S.Africa's Ramaphosa makes case for curbing public wage bill

(Adds PSCBC official)

JOHANNESBURG, March 2 (Reuters) - South African President Cyril Ramaphosa said on Monday focused discussions would be needed between the government and trade unions to slow the rate of growth in public sector wages.

His comments in a weekly newsletter to the nation signalled support for a proposal by Finance Minister Tito Mboweni to make 160 billion rand ($10.3 billion) of cuts to the public sector wage bill over the next three years.

Mboweni’s proposal in last week’s budget speech drew an angry response from unions, which can shut down parts of the economy if they do not get their way.

Some analysts have expressed scepticism that Ramaphosa’s government will be able to put an end to large annual wage increases for public servants.

“Our approach is not to dramatically cut the size of the public service, but to examine the rate at which wages grow,” Ramaphosa said in the newsletter.

“Public service wages have on average increased at a much higher rate than inflation over many years, and we need to fix this if we are to get public finances under control.”

Ramaphosa said the rising wage bill had crowded out spending on projects that drive economic growth and items that are critical for service delivery. He said it was unsustainable for Africa’s most industrialised economy to be spending far more than it earns.

But a senior official at the Public Service Coordinating Bargaining Council (PSCBC), where the government and public sector unions negotiate terms of employment, said no arrangement had been made for more formal talks on reviewing a three-year wage deal that runs until the end of March 2021.

The government told unions last week that it could not afford the final year of the deal and asked to renegotiate pay rises due to come into force in April 2020, but unions refused.

“There is currently no agreement or arrangement to further engage on the matter,” said PSCBC General Secretary Frikkie De Bruin, adding that the government or unions could ask for the issue to be discussed in the PSCBC at any stage.

“If the other party agrees, then the matter can be discussed. If the other side declines, then that is the end of the specific agenda item,” De Bruin said.

“We have never had a request before by one party to amend a resolution...There is no ‘standard practice’ in this regard.” ($1 = 15.5494 rand) (Reporting by Alexander Winning Editing by Kirsten Donovan and Mark Heinrich)

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