A new three-year deal to increase wages for South Africa’s public servants will cost the country 61 billion rand ($4.8 billion), acting Public Service and Administration Minister Nathi Mthethwa said on Monday.
“This will see the wage bill increase from 412.7 billion rand to 466.8 billion rand over the 2015 medium-term economic framework,” Mthethwa said in a written response to questions in parliament.
The government agreed last month to a 7 percent wage hike in the first year, and to increase housing and medical aid pay, but is now looking to pay 0.6 percentage points less.
Unions representing around 1.3 million nurses, teachers and police officers have threatened to withdraw from the wage agreement, raising the possibility of a protracted strike in Africa’s most advanced economy.
Any strike action would further dampen investor sentiment and business confidence in South Africa, which has been hurt by a wave of industrial action in the key mining and manufacturing sectors over the past two years.
The public sector wage bill has swelled more than 80 per cent over the last decade as annual increases averaged more than 6 percent above inflation, and the government is under pressure to rein in spending and curb costs as rating agencies flag possible downgrades.