South African public service unions and the government have failed to reach an agreement on workers’ pay, a government official confirmed on Saturday, raising the prospect of a major strike in Africa’s most advanced economy.
Any strike action by the 1.3 million nurses, teachers and police officers will hurt investor sentiment and hit economic growth, forecast at 2 percent this year, as South Africa struggles to escape the effects of a wave of strikes in its key mining and manufacturing sectors.
Unions, including those affiliated to powerful federation Cosatu, are demanding above inflation pay rises of 10 percent across the board, in addition to significant increases in housing and medical aid allowances.
They are in deadlock with government which is offering a CPI-related 5.8 percent increase in a three-year deal that will replace an existing agreement which expires on March 31.
“We have opted for conciliation as we believe that this route will succeed in bringing the parties closer towards finding an agreement,” Brent Simons, spokesman for the Public Service and Administration ministry, told Reuters.
“Not all options to find an amicable solution to the benefit of all parties have been exhausted (and) we therefore remain hopeful that an agreement can be reached,” he said.
But unions were perplexed at the move to declare a dispute, suggesting it enhanced the likelihood of labour strife.
“This is unprecedented … The employer is usurping the powers of labour by declaring a dispute so it means they will be going on strike,” said Mugwena Maluleke, spokesman for Cosatu’s public sector unions.
“And therefore we will reply with a strike,” he told Reuters.
“The likelihood of strike action has increased two-fold and that is the problem. This has been done at the initiative of the employers and I don’t understand why,” said Leon Gilbert, spokesman for the independent Public Servants Association.
Five years ago, just after South Africa hosted the Soccer World Cup, hundreds of thousands of public sector workers shut down schools and hospitals in a protracted and violent strike, the last major industrial action in the public sector.
Bowing to double-digit wage rise demands could call into question Finance Minister Nhlanhla Nene’s fiscal commitments to rein in spending and cap borrowing costs. It may also trigger credit rating downgrades.
The public sector wage bill has risen more than 80 percent over the last decade with an average annual growth rate of more than 6 percent above inflation.