South Africa municipal workers reject pay hike of 6.5 per cent

Unions say it's no match for increasing inflation
By Cosmas Butunyi
||Last Updated: 06/04/2012

JOHANNESBURG (Reuters) — South African public service workers negotiating annual pay increases have rejected a 6.5 per cent hike on offer, saying it does not take into account the "devastating effects" of increasing inflation on wages, unions said on Monday.

The Congress of South African Trade Unions (COSATU), representing 14 unions with about 1.3 million members, is seeking an eight per cent raise, down from 10 per cent initially demanded.

The government has lifted its offer from 5.9 per cent, compared with headline inflation at 6.1 per cent in April.

"We don't think that we will be able to take CPI plus 0.5 per cent back to our members and convince our members to sign. It has to be higher," said Chris Klopper, chairman of the Independent Labour Caucus, which also represents government workers.

In its February budget, the Treasury allowed for a wage increase of five per cent for public servants, adding that a huge state salary bill was crowding out investment in infrastructure and other key productive sectors.

Any settlement above five per cent is likely to undermine the government's ability to get the budget deficit in Africa's biggest economy down from the current forecast of 4.6 per cent of GDP.

Separately, unions representing 200,000 municipal workers said they had cut their demands for 15 per cent to 11.5 per cent but had made no "meaningful progress" in resolving an impasse with management.

The South African Municipal Workers' Union (SAMWU) said local government bosses were sticking at their previous offer of 4.5 per cent.

South African wage negotiations tend to last several weeks in a mid-year bargaining session known as "strike season", with unions often downing tools to back their demands, disrupting mine production and also hitting services in state hospitals and schools.

Further rounds of talks are due to be held over the next 10 days.

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