* COSATU-led unions asking for 2 pct above inflation
* Above-inflation settlement may swell budget deficit
(Releads with COSATU-led negotiations)
By Cosmas Butunyi
JOHANNESBURG, June 4 (Reuters) – South African public
service workers negotiating annual pay increases have rejected a
6.5 percent 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 an estimated 1.3 million members, is
seeking an 8 percent raise, down from 10 percent initially
demanded.
The government has lifted its offer from 5.9 percent,
compared with headline inflation at 6.1 percent in April.
“We don’t think that we will be able to take CPI plus 0.5
percent 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 only 5 percent for public servants, adding that a
huge state salary bill was crowding out investment in
infrastructure and other key productive sectors.
Any settlement above 5 percent 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 percent of
GDP.
Continued…
