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<\/a><\/p>\nLast week, the National Education Health and Allied Workers Union, which has 295,000 members and speaks for the biggest number of public-sector employees, said it will reject offers of less than 10 percent and says pleas for austerity are undermined by reports of corruption at state companies. Government employees represented by the Public Service Association want increases of 10 percent to 12 percent.<\/p>\n
Employee compensation is the biggest component of the budget, comprising about 35 percent of spending.<\/p>\n
\u201cSince 2011, government has been forced to restrict employee headcount growth to accommodate rising salaries — spending on compensation has continued to grow more quickly than nominal GDP,\u201d the Treasury said in an Oct. 25 budget update. \u201cA fair and reasonable compromise between government and state employees in the current round of wage talks is in the public interest.\u201d<\/p>\n
The Treasury sees the fiscal gap swelling to 4.3 percent of GDP this year, more than its February forecast of 3.1 percent. It would also be higher than the 3.3 percent registered in the last fiscal year.<\/p>\n
\u201cIf the government then wants to offer us a single-digit increase like 7.3 percent, then we have to withdraw our labor power and take the issue to the streets,\u201d Khaya Xaba, a spokesman for Nehawu, said by phone from Johannesburg. \u201cThese comrades have been very reckless with our economy.\u201d<\/p>\n
The economy experienced its second recession in less than a decade earlier this year as business confidence sank to the lowest since 1985 amid a litany of corruption allegations stretching from state companies to President Jacob Zuma were reported by local and international news organizations.<\/p>\n
Curbing spending is key for South Africa if it wants to hold on to investment-grade ratings for rand-denominated debt, with Moody\u2019s Investors Service expressing concern over the lack of measures to curb spending in the budget update.<\/p>\n
Moody\u2019s rates South Africa\u2019s foreign- and local-currency debt at one level above junk and is scheduled to make an announcement on the nation\u2019s debt on Nov. 24. A downgrade, which would remove the nation\u2019s securities from bond indexes tracked by investors including Citigroup Inc.\u2019s World Government Bond Index, could see outflows of as much as 200 billion rand ($14 billion), according to estimates by Bank of America Merrill Lynch.<\/p>\n
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