Govt to table new pay offer as Fitch warns public sector wage freeze unlikely
Is a national strike by public sector workers inevitable?
A report released on Tuesday by ratings agency Finch suggests that South Africa will not be successful in implementing a wage freeze for public sector workers.
The Public Servants Association of South Africa (PSA) had threatened to declare a dispute after the facilitation process of the past three days did not yield any results.
Wage talks had earlier deadlocked with government refusing to move from its position of offering no wage increases this year.
Unions want a 7% pay hike.
Eyewitness News reports that independent mediators have now asked for more time as government considers drawing up a renewed wage offer.
They will report back to the bargaining council over the weekend.
On The Money Show, Nazmeera Moola (Head of SA Investments at Ninety One) comments on Fitch's outlook for the country.
I think they are skeptical about government's ability to hold the line on wage increases in the public sector. But, more fundamentally, I think they are concerned about the lack of execution in boosting growth.Nazmeera Moola, Head of SA Investments - Ninety One
In his Budget Speech, Finance Minister Tito Mboweni was adamant that a public sector wage freeze was necessary to enable him to balance the books at some point in the future comments Whitfield.
So why has government been unable to find a way to end the negotiations impasse?
Mboweni does deserve some credit for "holding the line" so far says Moola.
Last year there was absolutely no budging from the government's side in terms of the 0% wage increase. That was what was implemented... Now, unions are demanding a lot more; going into mediation around it...Nazmeera Moola, Head of SA Investments - Ninety One
But so far, I think the government has done a far better job than I had expected of holding the line and, hopefully, that will continue.Nazmeera Moola, Head of SA Investments - Ninety One
She says it would be difficult for public sector workers to justify a strike after the economic fallout of Covid-19 last year.
We've seen quite significant job losses in the private sector. We've seen salaries cut in various companies in order to try and preserve employment, whereas in the public sector wages were kept whole through last year... We would like to offer every nurse and doctor a bonus after everything... but most of the public sector teachers didn't work for three to five months...Nazmeera Moola, Head of SA Investments - Ninety One
Having said that, there may be a lot of noise around it but I don't think there's a lot of appetite to implement it at this point in time.Nazmeera Moola, Head of SA Investments - Ninety One
Moola also discusses the likelihood of an efficient vaccine rollout and the effects of any tightening of restrictions during a third Covid-19 wave.
It seems that we are starting to pick up speed in terms of vaccine acquisition.... The critical point right now is going to be whether the government's [vaccination] booking system that they're launching next week works.Nazmeera Moola, Head of SA Investments - Ninety One
I think there's been massive learning within government around shutdowns...Nazmeera Moola, Head of SA Investments - Ninety One
Listen to Moola's analysis, also covering the prospect of a rise in global inflation: