South African State Workers Demand 10% Wage Increases

(Bloomberg) -- Labor unions representing South Africa's 1.3 million state workers demanded 10% pay increases to help them offset soaring electricity, transport and food costs.

The unions are also pushing for a single-year pay deal because they no longer trust the government to honor longer-term accords, according to a presentation they made to the public sector bargaining council on Wednesday That comes after the government reneged on increases agreed to in 2020, the final year of a three-year deal, on the grounds that it was unaffordable.

The remuneration of civil servants accounts for almost a third of total government expenditure and bowing to demands for inflation-beating increases would derail the National Treasury's plans to rein in the budget deficit and bring runaway state debt under control. Credit-rating companies have repeatedly cited South Africa's high wage bill as a major risk to state finances. The annual consumer inflation rate is currently 5.9%.

When the government backtracked on the 2018 accord, it argued that the Department of Public Service and Administration didn't have a mandate from the Treasury to sign off on the terms -- a view upheld by the nation's top court. The unions now want written confirmation from the Treasury that it has delegated the necessary negotiating authority to the department.

Read: South Africa Gets Top Court Backing to Renege on 2018 Wage Deal

The unions' other demands include:

A 2,500 rand ($160) increase in monthly housing stipends.
Allowances of 12% of workers' basic salary when disasters such as the coronavirus pandemic strike.
Permanent employment for teacher assistants, community workers and security force reservists.

The government is set to respond to the unions' demands on May 19. The February budget estimated that the state's annual salary bill will rise by an average of 1.8% annually over the next three fiscal years.