Xolani's Daily Comment

How long can government delay civil servants' demands?

Public sector unions are demanding a fifteen percent salary increase and I see that our finance minister Nhlanhla Nene is trying to impress upon public sector unions that their opening salary increase demand of fifteen percent is way out of line, is unaffordable and that well above inflation increases will come at the cost of jobs.

He is quoted in a newspaper article as saying " I have always been saying that if we settle for anything more than 1 percent above inflation at public sector wage talks that would compromise the headcount. We are committed to maintaining a moderate increase in headcount but also in the wages.

Now the problem with this statement is that it actually understates the nature of the problem.

And the understatement may not necessarily be a mistake. It is part of political expediency where the ANC government is prepared to accommodate unions and their demands even though it is obvious that state coffers can't anymore.

And there's imperial evidence to show this.

According to research by professor Jannie Rossouw head of Wits University's School of economic and Business Sciences conducted with Unisa's Adele Geldenhuys and Fannie Joubert..and published in 2012 and 2014..Between 2005 and 2012 total employment in central and provincial government rose 27 percent.

These employees' average annual per capita remuneration doubled in that period.

Between 2008 and 2012, total state employment rose by 13 percent, but the remuneration bill went up 76 percent.

The financial mail is quoting Rossouw and his colleagues as referring to the South African version of a fiscal cliff - that is the danger that the South African government might run out of income to cover growing government expenditure. They compare expenditure on social grants and civil service remuneration since 2008 with government revenue over the same period. Social grants as a proportion of total government revenue rose from 12,6 percent in 2008 to 14,2 percent in 2012. In the same period, the total civil service remuneration bill increased from 31,7 of revenue to 42.2 percent. Combined, grants and remuneration went up from 44,3 percent of revenue to 56,4 percent. That leaves just 43,6 percent for everything else..education, health, roads etcetera..

Completely unsustainable.

The problem is this is not about to stop. The unions are unlikely to drop their demand from 15 percent. And government does not have the moral authority to persuade them to. As long they can point to Nkandla and millions of rands that are paid how public funds are used.

Which makes talk of social compact even more difficult and almost impossible.

Government has got to be able to demonstrate to the workers that if they delay their demands, the money which would have gone towards their salaries is being used effectively - to improve the country so all South Africans can benefit.

Xolani's comment on civil servants' remuneration

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