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Government breaks off wage talks

June 14 2012 at 09:20am
By Reuters

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The government has broken off wage talks with 1.3 million state workers seeking above-inflation pay increases that threaten the government's ability to keep this year's budget deficit in check at 4.6 percent of GDP, union officials said on Thursday.

“The state has lost patience and terminated bargaining,” said Chris Klopper, spokesman for the Independent Labour Caucus, a state union umbrella group involved in the negotiations.

Cosatu, representing 14 state unions with an estimated 1.3 million members, has been pushing for an 8 percent raise, down from 10 percent initially demanded.

The government has been offering 6.5 percent, compared with headline inflation at 6.1 percent in April.

In its February budget, the Treasury allowed for a wage increase of only 5 percent for public servants, adding that a ballooning state salary bill was crowding out investment in infrastructure and other key productive sectors.

Any settlement above 5 percent is likely to undermine the government's ability to get the budget deficit in Africa's biggest economy down from the current forecast of 4.6 percent of GDP. - Reuters


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