G Fraser-Moleketi on wage negotiations

4 May 2007

In tabling an offer for the public servants in this round of wage
negotiations, government has taken account of all its spending priorities,
including social development, addressing crime issues, infrastructure
investment and better service delivery for the communities in the pursuit of a
better life for all. In the midst of all these priorities, government has come
up with a comprehensive remuneration package that is prudent, forward looking
and paves the way towards improving service delivery and public service
performance and at the same time, ensuring improved conditions of service for
all public servants.

Pursuant to the conciliation process which started on 12 and 13 April 2007
between government and the public service unions, which concluded,
unfortunately in the issuing of a certificate of non-resolution, on 3 May 2007.
The stalemate negotiations are due to the unwillingness of labour to move from
its original position, therefore creating a challenge in the negotiation
process.

The principles underpinning this round of negotiations and its offer to the
public servants include the following:

* general salary increases that keep pace with inflation so that the buying
power of public servants is not compromised and additional increases that are
linked to performance and service delivery
* the attraction and retention of skills in the public service through the
introduction of occupation specific dispensation (OSDs)
* growing the capacity of the state through job creation.

In an effort to resolve this current impasse, the offer from government, as
part of the conciliation process, include a 4-year multi-term wage agreement, a
6% salary increase for the first year, the introduction and implementation of
the occupation specific dispensation, the revision of certain allowances and
the alignment of the conditions of service to the Basic Conditions of
Employment Act (BCEA), with implementation date being 1 July 2007.

Despite the efforts from the state as an employer to revise the offer, the
public sector unions are still adamant on their list of demands. Note needs to
be taken that these demands amount to approximately R198 billion a year, which
doubles the current wage bill. This is unaffordable and impractical and
compromises other commitments of government. Any negotiation is determined by
the willingness by both parties to move in the spirit of collective
bargaining.

In terms of the multi-term agreement, Government is of the view that it is
beneficial for both the employer and the employees, as it deals with the
package of benefits for public servants and not only salary adjustments.

A multi-term wage agreement brings about stability in the planning for
personnel expenditure, while ensuring that public servants receive real wage
increases or at least inflation adjustments on their income. The forward
looking wage agreement brings government wage cost growth in line with the
inflation targeting monetary policy framework.

It therefore stabilises salary expectations in government, of which it is a
crucial commitment of Government, to ensure that this current expenditure, does
not compromise operational expenditure, thereby affecting service delivery. It
also leads to stability in employment patterns in the public service, because
government can plan the growth of the wage bill, inclusive of all the expected
salary adjustments.

Furthermore, it is structured in a way that is affordable, efficient and
allows sufficient time for the implementation of all the proposals in the
agreement. The employer through the conciliation process has also offered the
revisiting of the wage increase, mid-term in the agreement.

What the employer is offering in terms of the occupation specific
dispensation is beneficial for both the employer and the employees. The
occupation specific dispensation will allow government to address the
challenges of attracting and retaining skills in the public service and
therefore able to deliver on its commitments � ensuring a better life for
all.

This will be done through the development and implementation of customised
remuneration dispensation for broad categories of occupations in the public
service. The salaries of certain occupational categories will, where
applicable, be aligned to the market.

OSDs will also ensure fair, equitable and competitive remuneration
structures for identified categories of employees. The remuneration structure
will provide for longer salary bands and substantial overlaps between salary
levels to facilitate adequate salary progression to employees who choose to
remain in the production levels instead of aspiring to move into supervisory or
management posts.

OSDs will put in place a proper career pathing model for identified
occupational categories. Such a career pathing model is not an automatic salary
increase, but it is a forward looking plan to systematically increase salaries
after pre-determined periods based on specific criteria such as performance,
qualification, scope of work, experience, etc. OSDs provide for dual career
paths in terms of which professionals and specialists can progress to levels
where they earn salaries that are equal to/or higher than that of managers
without moving into management/supervisory posts. In this regard, the
specialist career path will accommodate the uniqueness of different
professional/specialist jobs by acknowledging existing 'job families' in the
specialist disciplines. Specialist career paths and related remuneration
structures will be developed for all the identified occupational
categories.

The 2007 Budget has allocated funds of R8,1 billion and R5,3 billion to the
teachers and nurses respectively. Part of the funds are earmarked for improving
the capacity of the state through hiring of new personnel, however, part of
these funds will include the implementation of the occupation specific
dispensation for these respective occupations. The Department of Public Service
and Administration is working together with the respective departments on this
dispensation.

The OSD will cover approximately 80% of the public service, including health
professionals, educators, certain legally qualified professionals in the
justice sector, social workers and correctional service employees over the next
4 to 5 years. An occupation specific dispensation for the South African Police
Service (SAPS) has been implemented with effect from 1 April 2006.

I would also like to take this opportunity to demonstrate that employees
have received real salary increases, especially those on lower salary levels.
They have received in excess of 10% real salary increases from the period 1997
to 2006. From 2001 to date, they have received further 1% for pay
progression.

In the previous rounds of negotiations, these employees further benefited
with regard to the introduction of the housing allowance and the free medical
cover for those who are members of Government Employees Medical Scheme (GEMS).
The housing allowance will once fully implemented increase the salary for the
lowest earner in the public service by approximately 15%. Free medical cover to
GEMS amounts to a maximum of R 1 900 per month for these employees.

A further proposal from the employer is to align the conditions of service
with the Basic Condition of Employment Act (BCEA). This would mean that the
leave entitlement of nurses will be aligned to those of public servants,
however, the employer will remunerate these employees working on public
holidays 2 X salary, while on Sundays, it will be 1,5 X salary. This means that
public servants will be gaining as they will be more money for them in the
pocket. The benefits for reducing the number of days for nurses are that the
employer will ensure that there are sufficient number of nurses in hospitals at
all times, thereby improving service delivery, while at the same time nurses
will be remunerated for their services.

Although the conciliation process did not succeed and labour has maintained
its original position without any indication of a compromise, government has
not done the same, but maintains its offer from the conciliation process. The
offer from government, as part of the conciliation process, stands.

Regrettably, labour has been unwilling to move on any of the demands that
they have been tabled and have therefore compromised the collective bargaining
process. Government would like to reiterate that we are committed to the
negotiations process and that a settlement needs to be found in the bargaining
council.

For more information contact
Kenny Govender
Cell: 082 555 5834

Issued by: Ministry of Public Service and Administration
4 May 2007