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Pay deal ups cost to R15bn

By unknown | Jun 22, 2007 | COMMENTS [ 0 ]

Namhla Tshisela

Namhla Tshisela

The proposed settlement with strikers will cost the state R15billion if the unions accept a 7,5percent pay rise offer, a senior government economist said yesterday.

This is R350million more than the government's revised offer of a 7,25percent salary increase, which would have cost R14,6billion.

Though the government's official offer stands at 7,25 percent, it would consider a 7,5percent increase, said government economist Vuyelwa Vumendlini.

The government has said civil servants' unions should accept its revised offer or settle for the lower offer.

"Anything higher than that is unaffordable and inflationary," said Vumendlini.

She said though it meant more money for the workers, it would also push up interest rates and the price of goods.

"It would fuel inflation in the long term," she said.

Cosatu spokesman Patrick Craven said the labour federation was consulting its members about the offer.

Steven Gelb, a development economist with the Edge Institute in Johannesburg, said a 10percent increase would not have much effect on inflation.

He said civil servants' packages had cost 9,4percent of the gross domestic product (GDP) last year but would have amounted to only 9,1percent of the higher GDP this year.

The unions' demand would keep them level at 9,4 percent, he said.

"Inflation is coming from a lack of capacity and imported prices, not from excess demand caused by fiscal expenditure," he said.

The unions have lowered their demand from 12percent to 9percent since the strike began three weeks ago.

The government has upped its offer of a 6percent increase to 7,25percent, including an additional 1percent general salary increase.

It has and has revised salary structures for skilled professionals and improved the housing allowance and medical aid contributions, which will now be paid for all staff.

Additional salary increases for health and medical professionals, teachers, legal professionals, correctional officials, engineers, architects and environmentalists would be introduced over two years from July 1.

Vumendlini said these incentives were aimed at making these careers more "lucrative" and retaining professionals in the civil service.

In terms of the settlement, a qualified teacher with four years' experience would earn R114423 from R99540, and a qualified nurse with four years' experience would earn R125942, up from R78477.


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