File picture: Philimon Bulawayo
JOHANNESBURG - South Africa’s public sector workers will see their pay rise by slightly more than inflation after the government — which is struggling to curb a large budget deficit — clinched a three-year wage deal with unions that had threatened to call a strike.

The National Treasury has flagged the public service wage bill as a “large and imminent risk” and had warned that salary increases exceeding inflation, and without staff reductions, would make it hard to limit government spending.

“We are not happy. However, we have done our best in terms of pushing the employer from the 4.5 percent they were offering,” said Mugwena Maluleke, chief negotiator for Cosatu, South Africa’s biggest union federation.

Under the deal reached on Monday, the government will increase salaries of public sector employees, including teachers, police, and nurses by up to 7 percent in the first year. In the second and third years, the government will provide hikes of up to projected inflation plus 1 percent.

Inflation slowed to 3.8 percent in March, the lowest figure since January 2011, as the end of the worst drought in decades helped push down food prices.

“There is still an in-principle agreement in place. We are in the process of seeking signatures from labour unions and we hope to get that soon,” said Kenny Govender, a senior official at the Department of Public Administration.

The salary increases are well below the 12 percent initially demanded by unions and will be seen as a victory for President Cyril Ramaphosa, who is trying to restore confidence in South Africa’s public finances and stave off ratings downgrades.

The deal should help keep credit rating agencies onside as South Africa battles to put a lid on expenditure, while boosting the ruling African National Congress’s (ANC) ballot box appeal heading into national elections next year.

Cosatu, which represents around 1 million nurses, teachers and police officers, is seen as a key vote-catcher for its long-time ally the ANC.

Khaya Xaba, spokesman for the NEHAWU union, which represents healthcare workers, said it would sign the wage deal on Monday.

The Public Servants Association (PSA), an apolitical smaller union, said it had rejected the government’s offer.

“If you look at year two and year three of the deal it is horrific,” said Tahir Maepa, deputy general manager at PSA.

The deal will still go through if larger unions accept it.

- REUTERS