Government rejects civil servant demands for 10% pay increases

South Africa’s government rejected demands from labour unions representing 1.3 million state workers for 10% raises and increased housing allowances and other stipends, instead proposing that it extend the payment of an additional R1 000 ($63) monthly cash stipend by a further year.

Acceding to the unions’ proposals will cost R146 billion over three years, which isn’t affordable, the government said in a submission to the public sector bargaining council, which was seen by Bloomberg. It also rejected demands for contract workers to be permanently employed.

Remuneration accounts for almost a third of total government expenditure, and keeping it in check is key to the National Treasury’s plans to rein in the budget deficit and bring runaway state debt under control. The unions have argued that inflation-beating increases are warranted in light of soaring food and energy costs. The annual consumer inflation rate is currently 5.9%.

The February budget provided