Government signs major five-year wage deal for municipal workers
The South African Local Government Association (Salga) has signed a historic five-year wage agreement with labour unions representing municipal workers.
The body, which represents the country’s 257 municipalities, said in a statement that the consumer price inflation (CPI)-linked agreement marked a “first in South Africa’s public service history” and followed three rounds of “intense negotiations” throughout the past several months.
The deal will be effective 1 July 2024 and remain in force until 30 June 2029.
“This deal is expected to provide much-needed stability in the local government sector,” said Salga.
The final breakthrough came on 15 August when the “facilitators issued a proposal that all parties accepted as a fair compromise”.
Key provisions of the agreement include:
- 2024/25 Financial Year: Employees will receive a 6% salary increase, structured as follows:
– 4.5% effective from 1 July 2024
– An additional 1.5% from 1 March 2025 - 2025/26 and 2026/27 Financial Years: Salary increases will be set at CPI plus 0.75%.
- 2027/28 and 2028/29 Financial Years: Salary increases will be pegged at CPI plus 1.25%.
The new salary and wage collective agreement follows the expiration of a three-year wage deal signed in 2021, which provided increases of 3.5% (2021/22), 4.9% (2022/23), and 5.4% (2023/24).
Consumer inflation eased to 4.6% in July 2024, the lowest rate since July 2021, from June’s 5.1%
“Salga was mandated by municipalities to negotiate a balanced salary and wage agreement that reflects current economic pressures, particularly in light of several municipalities facing financial distress.
“The agreement takes into account the challenging economic environment, characterised by high inflation and constrained fiscal resources,” said Salga.
The South African Municipal Workers Union (Samwu), which represents around 300,000 municipal workers said that the agreement “represents stability, consistency, and long-term benefits for municipal workers across the country.”
“The extended duration of this agreement will provide municipalities with the fiscal predictability necessary to improve planning, service delivery, and employee welfare,” added the group.
Samwu and the Independent Municipal & Allied Trade Union (Imatu) had tabled a joint list of revised demands for an across-the-board increase of 8% in the first year, CPI plus 2% in the second year and CPI plus 1.5% in years three to five.
However, municipalities have been feeling the pinch with ballooning wage bills. 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.”
Samwu initially demanded a 15% wage increase as well as having their workers provided with stands to build houses.
However, the outcomes of the negotiations saw a middle ground emerge.
Samwu noted that under the new agreement, employees earning R22,000 per month or less without a housing allowance will receive a one-time R2,000 payment in the first year to address urgent housing needs.
Additionally, the agreement acknowledges the need for better housing access and includes a study to explore improvements for municipal workers’ housing, with findings expected by March next year.
Imatu said that “the agreement was negotiated in very difficult economic circumstances, but our negotiators worked hard to ensure that we get the best deal for our members.”
“We presented a comprehensive analysis of the consolidated financial statements of municipalities, and this allowed us to demonstrate how the wage increases can be implemented and funded.”
“While the agreement has received overwhelming support, all parties now have the responsibility to ensure its implementation and defend its provisions,” said Salga.
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