Unions had ‘no choice on wage deal’

• Economic climate ‘ forced workers to compromise’

The two recognised unions in the local government sector would have wanted a bigger wage increase but were forced to compromise due to the negative economic climate and the pandemic in a deal that is largely viewed as favourable to the employer.

The two recognised unions in the local government sector would have wanted a bigger wage increase, but were forced to compromise due to the negative economic climate and the Covid-19 pandemic in a deal that is largely viewed as favourable to the employer.

In the wage hike agreement, unions unexpectedly agreed to many proposals that they had previously opposed, such as a multiyear agreement instead of the one-year deal they had sought, a freeze on some benefits and a window for parties to opt out of the agreement.

The SA Municipal Workers’ Union (Samwu), the biggest local government union representing about 160,000 of the country’s 300,000 municipal workers, said though the deal is not what its members wanted, it is much better than the one a hired facilitator proposed.

Samwu national spokesperson Papikie Mohale told Business Day that the unions rejected the facilitator’s proposal because “it said all benefits must be frozen during the duration of the agreement”.

“With this agreement that we have signed, it’s only in the first year of the agreement that some benefits will be frozen and everything will be back to normal during the outer years of the deal,” Mohale said.

“This is a better deal for workers, compared to what the facilitator was proposing.”

Keith Swanepoel, president of the Independent Municipal and Allied Trade Union (Imatu), told Business Day the wage hike agreement is not the “best deal for local government and our members”, but the union had to accept it because the government is broke.

“We are acutely aware of the dire state of municipal finances, and what has made matters worse is the unfortunate situation that we are in because of the pandemic,” Swanepoel said.

JOB LOSSES

Chrissy Dube, a researcher at Good Governance Africa, a research and advocacy nonprofit organisation focused on improving governance across the continent, said the unions were forced to compromise on their demands due to the negative economic climate brought on by Covid-19.

“The effect of the pandemic on the economy played a vital role in giving them [unions] that lower percentage, compared to what they were demanding,” Dube said.

The increase is “better than nothing, in an economy where people are losing jobs every day”, she said.

SA is battling a record 34.4% unemployment rate, the world’s highest. That translates to about 7.8-million jobless people after 1.4-million jobs were lost due to Covid-19 in 2020.

The SA Local Government Association (Salga), an employer body representing the country’s 257 municipalities, said it approached the wage talks with a view to ensuring the financial sustainability of municipalities.

The wage agreement is a “win-win” outcome for parties and gives municipalities who are in financial distress “a lifeline and a breathing room”, it said.

The Treasury angered unions in 2020 by calling on municipalities to apply for exemption from implementing standing wage agreements.

In terms of the three-year wage deal, signed on Wednesday, municipal workers will receive a 3.5% basic increase and a one-off non-pensionable cash allowance of R4,000 for those earning less than R12,500 a month, and R3,000 for those earning more, during the first year.

Increases “in the outer years of this agreement will be based on the inflation outlook and projections made by the SA Reserve Bank”, Salga said in a statement last week. In its July forecast, the Bank sees headline inflation averaging 4.3% in 2021, 4.2% in 2022 and 4.5% in 2023. The wage agreement imposes a “zero-rated increase in some benefits, such as homeowner’s allowance and medical aid. The work on the pension restructuring will commence”, with several reforms, the association said.

It is unclear how much implementing the wage agreement will cost. Salga and the Treasury did not respond to questions sent to them.

Samwu had initially demanded a one-year wage agreement of a R4,000 salary increase across the board. Imatu had demanded a 9% wage hike, or R2,500, whichever was greater. Samwu later revised down its demands to a R2,500 wage increase, or 7%, whichever was greater.

Both unions rejected a 2.8% wage proposal from Salga. The independent facilitator was then brought in and tabled an offer of 4% in the first year, and consumer price index minus 1% for the second and third years, respectively.

The facilitator also proposed a freeze on all benefits linked to salary increases, and included in the proposal a clause stating that in the event of unforeseen supervening circumstances, a party may tender to “withdraw from the agreement”.