After five months of strike action, the bulk of South Africa’s public sector unions agreed to a 7.5% wage increase on Friday, the government announced in a statement.
The two-year, multi-term agreement will make efforts to control out-of-control public expenditure at risk, experts previously warned. It is considerably more expensive than what the government had budgeted for in its 2023 spending plan.
Since November 2022, the unions in the public sector, which comprise about 1.3 million workers, have participated in various forms of protest.
The government rejected the unions’ initial proposal for a 10% pay raise when salary negotiations got underway in May. The unions lowered their demands in later rounds of negotiations to an 8% raise and the continuation of a monthly cash payment of 1,000 rand ($54.71).
The cash gratuity will remain under the final settlement for a full year, according to the government.
The estimated cost of the agreement is 37.4 billion rand in 2023–2024, according to a statement from South Africa’s finance department, which also noted that the risk of how the wage bill talks turn out having an impact on the country’s fiscal outlook has already manifested.
“Government will initiate processes to ensure that the latest wage agreement is implemented through significant trade-offs in the short-term and over the medium-term,” the treasury said.
The wage tab for the public sector accounts for about one-third of all government spending. The treasury had anticipated a 3.3% annual rise through 2025/26.
