Wage crisis looms as unions look for double-digit salary hikes

With formal public sector wage negotiations set to kick off soon, the Congress of South African Trade Unions (Cosatu) has revealed that it will be demanding double-digit salary increases for government employees.

Cosatu convener Khaya Sodidi told Newzroom Afrika that although they have not finished consulting with other unions, “indications are showing that we will be demanding double-digit salary increases,” said Sodidi.

The current two-year public sector wage agreement, which ends in April 2025, saw cash allowances translated into a pensionable salary, plus an increase of 3.3% in 2023/2024 and 4.7% in 2024/2025.

Sodidi said that this call for a double-digit increase is because their “studies show that the government employees have really not been receiving real increases if you have to compare with the running away inflation and then food prices, petrol, and so on.”

This echoes the sentiments of other government worker unions, who have been calling for much higher increases than what has been offered.

The South African Municipal Workers’ Union (SAMWU) recently demanded a 15% wage increase as well as having their workers provided with stands to build houses.

The South African Local Government Bargaining Council offered municipal workers a 3.75% wage increase, which SAMWU rejected. They have come down on their demands and are now looking for an 8% increase.

While some are supportive of such steep salary hikes, others question whether the state can afford it.

A report by the Centre for Risk Analysis highlights that the country’s public sector wage bill costs South Africa around R721 billion a year (2023/24 figures) – over 30% of the country’s budget.

This is R313 billion more than in 2013/14.

Written by Tamara Dimant, Chris Hattingh and Nicholas Lorimer, the report highlighted that South Africa has the third-highest government wage bill as a share of GDP compared with 20 major global economies.

“Although South Africa has a much smaller economy, its wage bill as a share of GDP (about 10.5%) towers over economic powerhouses such as the United States, United Kingdom, Australia and Japan,” it said.

South Africa has one of the highest-paid public sectors in the world, with a total wage bill 3.5% higher than the average in countries that are part of the Organisation for Economic Cooperation and Development.

Hattingh said that “this places significant pressure on an already constrained fiscus, and adding to that fiscal pressure are rising debt servicing costs along with public sector wage increases with further raises being pushed for by labor unions.”

Thus, “there is a growing risk of funding being diverted from other departments and National priorities such as infrastructure to service the country’s debt and to foot the public sector wage bill,” added Hattingh.

If this is not the case, increasing this wage bill is said to strain already stressed taxpayers – with 95% of all personal income tax in the country paid by 30% of taxpayers and 97% of all corporate income tax paid by just 3.5% of companies.

However, Cosatu has shrugged off these concerns, with Sodidi citing two reasons for this.

Firstly, he said that the money for the increases “is there,” but issues of “corruption and missing money” have meant that there is less money for service delivery and employee remuneration.

Secondly, Sodidi said that the arguments of a bloated public wage bill and employee fleet are “ironic” given that after the elections, the President substantially increased the national executive, with 32 ministers and 43 deputies.

“So you can’t signal right, and then you turn left – as government [you can’t say] that there’s no money, but we are still increasing the cabinet,” said Sodidi.

Sodidi said that Cosatu and other unions will meet again on 16 August to finalise their negotiation strategy.

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