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JOHANNESBURG - The deadlocked public sector wage negotiations look set to be headed for a dispute with the government determined to manage the bloated public service wages while unions have vowed to push for above-inflation increases.

The negotiation teams have been locked in negotiations since October, but appear to be nowhere close to reaching an agreement.

The Public Servants Association (PSA) general manager, Ivan Fredericks, said the last offer from the employer was tabled in January, but unions felt it fell short of its demands.

“The PSA believes that the employer is negotiating in bad faith, using unnecessary delaying tactics. Should no real progress be made or proper negotiations not commence, the PSA, as representative union of more than 238000 public servants, will be left with no option but to explore dispute resolution processes,” Fredericks said.

Parties to the Public Service Co-ordinating Bargaining Council will convene today to continue with negotiations. The Organisation for Economic Co-operation and Development last year said South Africa’s wage bill is one of the highest among its developing country peers. The National Treasury in its 2018 Budget Review said the government is working to ensure that the current wage negotiations process results in a fair and sustainable agreement.

PwC economist Christie Viljoen said an above-inflation settlement would result in public sector wages continuing to grow as a percentage of government spending.

“Rating agencies have also warned about the adverse impact that a continued rise in public wages could have on the country’s ratings. A growing commitment to salaries and wages reduces the flexibility of the fiscus to respond to changing conditions in the economy,” Viljoen said.

Unions are demanding wage increases of Consumer Price Index (CPI) plus 3percent for junior government employees and CPI plus 2percent for mid-level employees. They also want a one-year wage agreement instead of the current three-year cycle. Trade unions have also highlighted the first value-added tax hike since 1993, and other tax hikes introduced by the National Treasury in the 2018 Budget.

The chief economist at Citadel, Maarten Ackerman, said the government needed to conduct an actual headcount of the civil service to reduce the public wage bill and to link a wages increase to inflation.

-BUSINESS REPORT