The majority of South Africa’s public sector unions agreed to a 7.5% wage increase on Friday. The government stated in a statement, after five months of strike action.
Analysts have already noted that the two-year, multi-term contract poses a danger to efforts to rein in out-of-control public spending. As it is far more than what the government had budgeted for 2023.
Since November 2022, unions representing an estimated 1.3 million public sector workers have participated in different kinds of protests.
The government and the unions began salary negotiations in May, with the unions initially seeking a 10% increase.
As a consequence of the talks, the unions eventually agreed to an 8% rise. There will also be a continuation of the monthly 1,000 rands ($54.71) cash bonus.
The government has said that the monetary incentive would be extended for an additional year as part of the final settlement.
South Africa’s finance department announced in a statement that the arrangement will cost the government 37.4 billion rands in 2023/24 and that the threat to the country’s fiscal outlook posed by wage bill negotiations had been realized.
Treasury officials have said that actions would be taken to ensure that the most recent wage agreement is implemented via considerable short- and medium-term concessions.
Nearly one-third of all government expenditure is allocated to wages and perks for the public sector. The Treasury anticipated an annual growth rate of 3.3% until 2025/26.
