President of Cosatu S'dumo Dlamini.
JOHANNESBURG - Public sector unions have locked horns with the government over this month’s 1percentage point hike in value-added tax (VAT), throwing in the ongoing wage negotiations.

Yesterday Cosatu issued a stern warning to the government, saying its members in the public service were ready to shut down the country should their demands not be met.

Spokesperson Sizwe Pamla said the unions were angered by the VAT hike and the February Budget that the workers viewed as hostile to the poor.

“The failure by the government to take seriously these negotiations at a time when workers are already victims of an increase of VAT and the fuel levy will feed the already rising tensions,” Pamla said.

“We caution the government against creating an environment that will force workers to consider withdrawing their labour and embark on what will be a calamitous strike.”

Union members made up almost 70percent, or 1.4million workers of all the public sector’s formal workers in 2014, up from 55percent in 1997.

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.

In contrast the government’s opening offer was CPI increases for junior and mid-level government employees on levels 1-10 and a hike of CPI-plus 1percent for senior government employees on level 11-12 and a three-year agreement.

In its 2018 Budget Review, the National Treasury said the public service wage bill comprised the largest share of current expenditure, at an expected 35.2percent over the medium term, on account of both an expansion of civil servant head counts and high average wages.

Public Servants Association (PSA) general manager Ivan Fredericks said the delay in concluding negotiations was leading to increased frustration among members in the face of the possibility of no increase to compensate for the effects of hikes in VAT and fuel prices.

“The PSA has warned before that the government’s approach to the negotiation process could be troublesome.

“Failure by the employer to respond to the PSA’s call will leave the union no other option but to declare a dispute,” Fredericks said.

The PSA represents some 238000 public service employee.

The latest round of negotiations started on Wednesday.

Public Service Administration Minister Ayanda Dlodlo said the government had no intention of delaying the public sector negotiations process.

Best outcome

“I would like to restate our commitment to this process and assure all stakeholders that we will not rest until a best possible outcome is found between the negotiating parties,” Dlodlo said.

In 2010, public servants went on a strike that lasted for weeks, affecting thousands of public schools and hospitals and costing the economy billions of rands.

Sanisha Packirisamy, an economist at Momentum Investments, said it was imperative that the government started linking wages to productivity in the public sector.

“The National Treasury has also shown that the higher-income earning deciles will, in fact, provide the bulk of the additional VAT revenue,” said Packirisamy.

- BUSINESS REPORT