The business community in South Africa has a lot to smile about after it was revealed on Tuesday that the South African government had come to an amicable agreement with its worker representatives regarding the salary increases for this year. This was revealed by the head of the bargaining council, who added that the agreement had averted a potentially crippling strike that could have involved more than 1.3 million workers in the South African public service.
According to Frikkie de Bruin, general secretary of the Public Service Co-ordinating Bargaining Council, the workers had initially demanded a salary increase of 15% but in the course of the negotiation, had lowered their demands to 10%. When the negotiations, which started as long ago as in September, reached a stalemate, they were referred to independent mediators in March, 2015. The final raise that they managed to get after the protracted negotiations was 7% and the workers were happy with the deal. Other perks that come with the deal are that the employer agreed to pay its employees wages that are increased by the projected consumer price inflation, which, according to Treasury, is expected to be 4.8%, with an additional 2.2%. The three year deal requires that the employer pays, in 2016 and 2017, salaries that are in line with the average rate of inflation plus 1%. Medical aid was a topical issue in the discussion and the workers managed to make inroads as the government agreed to pay them medical aid cover which is increased by 28.5% in addition to another increase in their housing allowance of R300 to R1 200 per person per month.
Responding to the announcement of the increases, the spokesman for the largest independent union, the Public Servants Association, Leon Gilbert said that this was a good deal for both parties to the negotiation process. “A good deal is a deal that nobody is really extremely satisfied about. There are things that could have been better but under the circumstances this is the best deal that was on the table,” he said. There was a huge sigh of relief from the economy as a potentially crippling strike had been averted. This is more so especially coming from the most devastating last five years in the South African economy. The economy has had to contend with a number of massive strikes in key sectors such mining and manufacturing industries. According to many economic analysts, this has not had a positive impact on the South African economy. In addition, the fact that the public sector wage bill has ballooned by more than 80% in the last ten years is not helping the economy and rating agencies keep hinting at possible downgrades, which could offset a vicious downward spiral in the economy.