S.Africa’s public-sector wage demands would cost $1.7 bln - finmin - CNBC Africa

S.Africa’s public-sector wage demands would cost $1.7 bln - finmin

Southern Africa

by Reuters 0

Nene says any wage increase greater than the 5.8 per cent inflation rate cannot be financed through debt issuance. PHOTO: GCIS

Wage demands by South African public-sector unions would cost the government an extra 20 billion rand or 1.67 billion dollars over the next financial year.

This is according to the country’s finance minister, as workers threaten mass protests in a push for higher pay.

Unions are seeking a 10 per cent pay rise. That would increase government spending by about 1.5 per cent in 2015/16, Nhlanhla Nene said in a written response to parliamentary questions on Thursday.

The government is offering an inflation-linked 5.8 per cent rise in a three-year deal to replace the existing agreement, which expired on 31 March.

The drawn-out wage talks are putting more pressure on Africa’s most developed economy, which is already suffering from widespread power shortages and high unemployment.

Any wage increase greater than the 5.8 per cent inflation rate that the government offer is based on “cannot be financed through debt issuance,” Nene said. The government would need either to reallocate funds from elsewhere or cut jobs, he said.

(READ MORE: Dispute declared in S.Africa’s public sector wage talks – source)

The Treasury has repeatedly said current levels of debt are unsustainable, at around 40 per cent of gross domestic product.

On Friday, a union representative told Reuters that around 20,000 government workers were planning a march on 23 April to press their wage demands.

“If we do not get what we want, that march will be followed by other actions that we still have to decide on,” said Mugwena Maluleke, a spokesman for trade union federation Cosatu’s public sector affiliates.

Comments