State can afford living wage for workers

Simon Kimani Ndungu

Simon Kimani Ndungu

For the first time in three years, public servants have downed tools and taken to the streets to demand pay increases and an improvement in their conditions of service.

The government counters that these demands are unrealistic, unreasonable and, to an extent, illegitimate. The state's stance has received a convenient boost from no less than Reserve Bank governor Tito Mboweni who warned subtly that the wage demands, if met, risked increasing the rate of inflation.

In the climate of accusations and counter-accusations that characterises the relationship between unions and the Public Service and Administration Minister Geraldine Fraser-Moleketi, what has been lost to the public are the real demands raised by public servants and whether or not the state can afford them.

The central point of focus is the 12percent wage increase demand. Unions insist this is non-negotiable; the state asserts that it has no budget to meet it.

Public servants are also demanding that their wage agreement be reduced from three years to one year, that all vacant posts be filled , that the home-owner allowance be increased and that there be a reduction in the number of notches in the pay progression system.

They want pay progression to be de-linked from job performance, medical aid contributions to be increased and that workers not be compelled to join the government medical aid scheme.

Lastly, public workers are demanding a closure of the apartheid wage gap by collapsing the first two employment bands into the third level which will then become the entry point for all public employees, and for minimum service level agreements in essential services such as nursing, policing and prisons.

In return, the government is offering a 6,5percent wage increase, a four-year collective agreement with yearly wage increases linked to inflation, and the implementation of what it terms "occupation specific dispensations" for workers in the health, education and judicial sectors.

If accepted, the minimum package for workers in these three sectors would rise to just more than R71000 a year.

Unions have rejected the government offer and accused the state of negotiating in bad faith.

But is the government offer realistic, given economic conditions and taking into account what management and senior levels of public servants earn?

A public servant at Level 1, the entry point, earns about R2900 a month, just less than R35000 a year. For many employees, their wages are hardly enough to afford them a decent standard of life given the rapidly rising cost of living.

At the end of last year, the yearly rate of inflation, known as the Consumer Price Index, stood at 4,6percent. But the average rate of inflation on food stood at 8,1percent with the cost of meat rising by 17,8percent.

Similar increases were recorded in the cost of non-food items such as fuel and power, education, and health and medical care. The majority of workers spend well over half of their income on food and other basic necessities, and this is where inflation hits hardest.

A 6,5percent salary increase means that the basic wage of the first tier of public servants will rise by a mere R174 a month to R3074. Contrast this pay with the monthly remuneration of a director-general at about R67000, and with the recent proposals made that President Thabo Mbeki's monthly salary of R92000 be increased by 57percent, while salaries of ministers and their deputies, premiers, mayors and also judges be raised by about 20percent.

MPs were aghast at the recommendation of a "paltry" 5,4percent increase for them. From whatever angle one looks at it, a 6,5percent salary increase will hardly lift public servants from the onslaught of soaring food prices and the ever-rising cost of basic commodities.

The government's offer of a four-year term is not gratuitous. If it commences this year , it ends in 2011. This will help the state circumvent a possible confrontation with labour during the crucial 2010 Soccer World Cup.

Since 1996, public sector unions have entered into three-year agreements and these are streamlined along the government's budgetary planning.

While this approach helps create labour stability and improves productivity, it ties the hands of workers since they cannot strike to renegotiate demands already covered. Even giant private sector unions such as the National Union of Mineworkers and the National Union of Metal Workers of South Africa have indicated they will abandon multi-year agreements.

The occupation-specific dispensation unfortunately does little to improve overall living conditions. House prices have shot up in the past five years as a result of low interest rates. An average house now costs about R400000 and it is predicted that by 2010, a normal three-bedroom house in Johannesburg will cost more than R700000. Given low salaries in the public service, financial institutions are unlikely to rush to advance bonds to public workers because of their perceived high risk of defaulting on payments.

The cost of medical care has soared and many workers face the difficult choice of remaining with private medical aid schemes and paying more, or moving to the government scheme which offers a lower range of benefits.

Interestingly, the government says very little about the last two workers' demands - to close the wage gap in the public sector, and to commit itself to a minimum-service agreement in relation to essential services.

In 1994, one of the new government's avowed commitments was to address the huge wage disparity in the public sector.

Then the public service was predominantly white with the top echelons occupied by managers earning up to 100 times more than the black workers who trailed at the bottom.

Between 1994 and 1996, public sector unions and particularly Nehawu were instrumental in transforming the public service to reflect the country's demographics and close the apartheid wage gap. With the adoption of the conservative macroeconomic policy, the Growth Employment and Redistribution Strategy, in mid-1996, the government went into austerity mode.

There was a cut in personnel expenditure by about 1percent every year until 2001, vacancies were frozen and functions considered non-essential were outsourced or privatised. Ironically, the government embarked on a drive to match the salaries and packages of its senior servants with those offered in the private sector, while keeping the wages of lower category public workers at very modest levels.

Rather than close the apartheid wage gap, this has widened it. It is little wonder therefore that while a worker at Level 1 earns slightly less than R35000 a year, a director-general earns in excess of R800000.

Essential services remain a bone of contention. In terms of the Labour Relations Act, no employee in the public service may embark on a strike if they are engaged in an essential service.

Public sector unions have been fighting to get the government to sign an agreement so that workers would be able to strike over services which would fall outside of the scope of essential services.

At the onset of the strike on June 1, the government was quick to warn workers in the police, prisons and nursing sectors that they faced disciplinary action, including summary dismissal, if they participated. It is unlikely that government will soon give up what it considers to be its most potent weapon of disciplining workers in the public service.

For some time now, there has been a big lull in the public service with industrial action carefully put on hold through multi-year agreements.

This is now changing with workers demanding a bigger say in both what they want to be paid, and in the way they should be able to exercise their constitutional right to strike.

The present dispute is unnecessary because the government can very well afford the demands.

Finance Minister Trevor Manuel proudly proclaimed in his budget speech in February that government already has a surplus of R5billion.

l Simon Kimani Ndungu is a senior researcher at the National Labour and Economic Development Institute.