8 June 2018

South Africa: Govt Welcomes the Conclusion of Public Service Wage Negotiation

press release

Government has welcomed the conclusion of another three-year multi-term Public Service wage agreement after a long and difficult negotiations process.

The agreement has now been signed by a 65,74% majority of all parties, therefore as Government we understand that all forms of industrial action now fall away.

Government will initiate a process to implement all aspects of the agreement, including all salary adjustments for public servants, which have been agreed to as follows:

Levels

2018/19

2019/20

2020/21

CPI

5.5%

Salary Levels 1-7

CPI + 1.5%

CPI + 1%

CPI + 1%

Salary Levels 8-10

CPI + 1%

CPI + 0.5%

CPI + 0.5%

Salary Levels 11-12

CPI + 0.5%

CPI

CPI

The adjustments are inclusive of employees on Occupational Specific Dispensation (OSD) and are effective from 1 April 2018.

The OSD employees are those employed as professionals in the Public Service such as doctors, nurses and teachers among others.

Minister for the Public Service and Administration, Ms Ayanda Dlodlo says the current wage negotiations, facilitated by the Public Service Coordinating Bargaining Council (PSCBC) took place amid growing concerns over the escalating Public Service wage bill and a contracting economy which pose serious challenges to the already strained government fiscal purse.

"As government we are glad that we have reached another multi- term agreement. The agreement proves that it is possible for both parties to reach an amicable agreement that puts the stability of the country and service delivery first. We recognise and appreciate the commitment shown by labour unions throughout the negotiations process, and we commit ourselves to fully implement the agreement," said Minister Dlodlo.

In addition to salary adjustments, the agreement provides for other key items that will have cost implications over the 2018 Medium Term Expenditure Framework (MTEF). Importantly, the agreement also provides for equalisation of pay progression of all employees in the public service to 1.5 percent per annum. Key occupations affected are Police and Educators.

Also included, is that the housing allowance of R1 200.00 will now be increased annually by the average CPI of the preceding financial year on an annual basis. The adjustment will be effected on the 1st of July of each year as per clause 4.6 of PSCBC Resolution 7 of 2015.

To add to the housing allowance, there is a provision for the delinking of payment of the allowance to spouses employed within the Public Service. Spouses will now enjoy the benefit of individual housing allowance.

The 2018 MTEF (which covers the period from 2018/19 to 2020/21) made a provision of R110 billion for salary adjustments and improvements in other conditions of service for employees falling within the scope of the PSCBC.

The 2018 salary agreement exceeds this amount by R30 Billion over the Medium Term Expenditure Framework (MTEF).

This then calls for cost containment measures to ensure that the wage bill remains within the existing compensation ceilings.

Firstly, an employee-initiated severance package that will focus on encouraging public servants between the ages of 60-65 years to go on early retirement will give government the ability to absorb more youth into the public service.

The Youth Unemployment rate is currently at 32,4% and the employee-initiated severance package will go a long way towards dealing with the problem of youth unemployment in the country. The programme will have short-term costs, but long term gains such as reducing the overall wage bill and create employment opportunities for the youth.

Secondly, the interventions that will assist with streamlining government for improved service delivery and sustainable earnings management include, but are not limited to:

Early retirement without penalties

Employee initiated severance packages

Review of performance management and incentive system

Centralised job grading and evaluation

More effective management of allowances, including base amounts and frequency of adjustments.

All these measures will be implemented in a manner that avoids negatively impacting on the capacity of the state to deliver quality public services. This will also require a review of the structure of government, in order to reduce fragmentation and duplication of functions (including elimination of redundant posts), and continued careful management of earnings growth including allowances, performance incentives and other benefits.

This will assist with the management of both headcount and earnings of public servants.

Minister Dlodlo added that: "In the present economic conditions, it is important to balance our spending on the wage bill and resources required for service delivery while taking into cognisant the strain in our public finances as a result of the sluggish economy."

Minister Dlodlo thanks all the parties for working hard to ensure that this agreement is negotiated in the best interests of all public servants and the public at large.

These wage negotiations happened during very difficult economic conditions, they were very grueling and demanding on all negotiation teams, therefore a great deal of gratitude is owed to all the teams for their professionalism, dedication and commitment to the country.

The Minister also expressed great appreciation to the Committee of Ministers for their hard work. Finally the Minister lauded public servants for showing great patience with the negotiation process.

Minister Dlodlo further restated Government's commitment to improve productivity in the Public Service whilst prioritizing the fight against poverty, unemployment and corruption. She further appealed to all public servants to continue serving the country and rededicate themselves to putting the people first - Batho Pele We Belong, We Care, We Serve.

Issued by: Department of Public Service and Administration

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