South Africa Raises Wage Offer to Civil Servants in a Bid to Avert Strike

South Africa’s government raised its pay offer to 1.3 million state employees in a bid to avoid a strike that threatens to close schools and hospitals.

The government proposed increasing workers’ base pay by 7 percent, up from a previous offer of 6.5 percent, backdated to July 1. Its offer to lift housing allowances to 630 rand ($87) from 500 rand was left unchanged. Adjustments to salary bands meant most workers would on average receive 9 percent increases, Public Service and Administration Minister Richard Baloyi said.

Unions are demanding an 8.6 percent pay increase and monthly housing allowances of 1,000 rand backdated to April 1. The Public Servants Association staged a two-day strike last week in support of its pay demands and had threatened to resume the action on Aug. 10 if the government failed to meet its demands. Other unions had said they’d hold a protest on Aug. 10 ahead of a full-blown strike.

“We have to put this matter behind us,” Baloyi told reporters in Pretoria today. “The unions and our negotiators are busy engaging. I would be jumping the gun if I reported they had agreed.”

A four-week strike in June 2007 shut most schools and disrupted services at some hospitals, clinics and immigration offices, and led the government to deploy troops to quell violent protests.

The government wants to negotiate multi-year wage agreements to avert repeated confrontation with unions, Baloyi said.

Exports Hit

In May, state transport company Transnet Ltd. gave its workers an 11 percent wage increase to end an 18-day strike that crippled exports, while state-owned power utility Eskom Holdings Ltd. last month agreed to a 9 percent raise to avert labor action.

Inflation slowed for a sixth consecutive month to 4.2 percent in June, and the central bank expects it to remain within its 3 percent to 6 percent target until the end of 2012.

Granting workers increases in excess of inflation was “not sustainable” and would force the government to divert money from other priorities, Baloyi said.

The government has seen its wage bill double to 259 billion rand over the past five fiscal years.

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net;

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