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South Africa Plans to Implement Wage Increase Even If Unions Reject Offer

The South African government said it will unilaterally implement a wage rise if striking public sector workers don’t accept the offer.

The government added 10 rand ($1.37) to its proposed monthly housing allowance increase yesterday, Public Service and Administration Minister Richard Baloyi told reporters in Pretoria today. Further raises are “unaffordable,” he said.

“You don’t have to spend what you don’t have,” Baloyi said, adding that he didn’t think the government would have to implement the pay increase unilaterally.

About 210,000 teachers, nurses and other state workers went on strike for a second day today. Unions representing 1.3 million workers are demanding an 8.6 percent pay raise and monthly housing allowances of 1,000 rand, backdated to April 1. The government offered a 6.5 percent wage hike and an increased housing allowance of 630 rand a month, with effect from July 1.

The 10-rand improvement was “insulting,” Leon Gilberts, the national manager of the striking Public Servants Association, said in an interview from Pretoria, where the union held street protests.

The impact of the strike remained unclear, Baloyi and Gilberts said.

“We are sure that we have very broad support,” Gilberts said.

Negotiations Continue

The government and unions agreed to negotiate until Aug. 6, when members of the Congress of South African Trade Unions may join the strike, Baloyi said. The government is “confident” of a solution, he said.

“If further unions were to join, the action would cripple the public service but would probably have a more limited impact on key economic sectors and commodities than a recent three-week transport strike,” New York-based Eurasia Group said in an e- mailed statement today.

State transport company Transnet Ltd. in May gave workers an 11 percent wage, while state-owned power utility Eskom Holdings Ltd. this month agreed to a 9 percent raise to avert a strike.

The government, whose wage bill has doubled to 259 billion rand during the past five fiscal years, says it must curb increases to focus on delivery of health and education.

“It’s not as if we don’t have other things to do,” Baloyi said.

Inflation, which slowed for a sixth consecutive month to 4.2 percent in June, will remain within the central bank’s 3 percent to 6 percent target until the end of 2012, South African Reserve Bank Governor Gill Marcus told reporters on July 22.

To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net.

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