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Nehawu to defy call for wage restraint

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Johnnesburg – South Africa’s largest public sector union on Wednesday vowed to seek wage hikes above the inflation rate in coming negotiations, defying the new Finance Minister Malusi Gigaba’s demands for restraint to avoid further credit downgrades.

Nehawu's stance raises the spectre of a protest wave seeking President Jacob Zuma’s resignation widening into damaging strikes.

The public sector wage bill accounts for nearly half of government revenue and has risen more than 80percent over the past decade, with yearly increases averaging more than 6 percent above inflation.

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The National Treasury may struggle to borrow the extra money it needs to plug the wide budget and capital deficits, as well as meet wage demands from public servants after damaging downgrades to junk status by S&P Global Ratings and Fitch following Zuma’s axing of former finance minister Pravin Gordhan last month.

Gigaba has pledged to oppose above-inflation wage rises for state employees to preserve South Africa’s fiscal discipline and stave off a third downgrade by Moody’s.

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