Government raises offer for public wage hikes

The Department of Public Service and Administration has adjusted its wage increase offer for approximately 1.3 million government workers to 4.7%.

During the initial Public Service Co-ordinating Bargaining Council (PSCBC) meeting on October 1, 2024, unions rejected a 3% salary increase offer, which was a counter to their initial demand for a 12% increase that the government had already turned down.

The parties decided to pursue a facilitated process with the PSCBC in order to seek common ground, which commenced on October 8.

“Parties to the PSCBC engaged in facilitation discussions in order to find amicable solutions,” said PSCBC general secretary Frikkie de Bruin.

Government’s revised salary and benefits offer for 2025/26 includes a salary increase of 4.7% increase for 2025/26, with future hikes linked to CPI in 2026/27 and 2027/28.

This is above consumer price inflation (CPI), which StatsSA reported was 3.8% in September 2024, down from 4.4% in August 2024

Other updates of the ongoing negotiations include:

Allowances

Government has offered increases to various allowances, including:

• Homeowners Allowance: From R1,784 to R1,900.
• Medical-Aid Subsidy: Adjusted in line with the Medical Price Index (MPI)
• Danger Allowance: Increased from R597 to R650;
• Special Danger Allowance: Raised from R849 to R920;
• Service Allowance for Police: Increased from R700 to R920.

Deferred demands

Several demands have been deferred, where these will be researched, and position papers will be developed for future negotiations. These include:

• Death Grant;
• Childcare and Breastfeeding Facilities;
• Bursary Scheme for Public Servants’ Dependents;
• Standardisation of Uniform Policy;
• Standardisation of Recruitment and Selection Policy.

Points of contention

Parties will further engage on the following demands, which the PSA said it will continue to push for in future negotiations:

• Payment of pay progression beyond the maximum notch;
• Abolishment of salary levels 1 to 3;
• Award of R6,500 for employees who have completed ten years of service;
• Permanent appointments for reservists, educator assistants, and community healthcare workers;
• Reinstatement of the performance bonus.

De Bruin said that “during the facilitation, progress was made to close the gap between the cost of living adjustment demand of labour and the offer from the employer.”

“There are also areas where there is still disagreement or where very little progress is made, such as the increase to the medical aid subsidy, pay progression and the abolishment of levels 1-3 [and] parties will continue to seek solutions on these areas,” De Bruin told Business Day.

In a statement, De Bruin revealed that labour had requested time to consult its members on the proposals, and the PSCBC will allow this. As a result, no further details could be shared at this time.

There is no set date for the next negotiations, but it is hoped that consultations will conclude within the next 14 days.

Mounting public sector wage bill

While some are supportive the salary hikes, others question whether the state can afford it – with all eyes on Minister of Finance Enoch Go­dongwana’s Medium-Term Budget Policy Statement (MTBPS) on Wednesday, 30 October.

A Centre for Risk Analysis report 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.

“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.

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.

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.

In the 2024 Budget Review, the government projected a total wage bill exceeding R750 billion for the 2025/26 fiscal year, reflecting an increase of approximately 4.5% compared to the prior year.

Hattingh said, “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.”

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.”

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.

Read: Calls to hike cigarette, alcohol and sugar taxes in South Africa