Issued by: Ministry for the Public Service and Administration
August 18 1999
Madame Speaker
Mr President
Honourable members
The President, Honourable Thabo Mbeki, in his opening address to this parliament on the 25 June 1999 said:
"At the dawn of a new life, our practical actions must ensure that none can challenge us when we say - we are a nation at work to build a better life!"
The acceleration of service delivery as reiterated by the President in his opening address to Parliament is unattainable if not matched by an equal determination to speed up the transformation of the public service. The transformation process should result, amongst others in changes to public expenditure patterns, better control and containment of personnel expenditure, improvement in the quality of spending, eliminating gross inefficiencies and corruption as well as implementing the principles enunciated through the Batho Pele campaign.
We value the contribution by public servants and we want to safeguard the rights of workers earned after decades of struggle. Indeed, the transformation of the public service will not be successful without the full co-operation and participation of public servants. Public Servants, as individuals and through labour organisations have played a constructive role in the various transformatioovernment. For the majority of public servants, supporting transformation is not only a patriotic duty but also an opportunity for personal career and economic advancement.
In what way has the lot of public servants improved over the past 5 years?
Government has sought to be an exemplary and be a model employer. We have through the last few years not only re-affirmed workers rights but also significantly improved the basic conditions of service of state employees. Since 1994:
This means that the lowest paid 30% of public servants, for example cleaners, construction and forestry workers earn between R1 800 and R2 500 a month, with an additional 15% employer contribution to the pension fund, and access to a monthly housing allowance of about R850 and a medical aid contribution of about R837 a month.
Personnel expenditure relative to overall government expenditure
Our determination to be a model employer must however be balanced with other equally important responsibilities and obligations of the state. Personnel expenditure currently amounts to R72 billion and about 52% of the budget after interest. Between 1994/5 and the current budget, the share of personnel in the budget rose rapidly, from 37% to 52%. The fact that personnel costs account for over half of overall expenditure and more than 70% in the health and education sectors, militate against any further dramatic increases in personnel expenditure. Taking into account relatively low national investment rates and the need to shift resources towards fixed investment, any attempt to sustain growing personnel expenditure patterns will seriously undermine the ability of the nation to achieve redistribution and development targets
The discrepancy between growth rates in total spending and personnel costs ultimately reflects the relative rigidity of labour costs. When budgets decline year on year, it is difficult to immediately effect similar cuts in personnel spending. Personnel spending can only be reduced through downsizing, whether through redeployment, retrenchment or attrition, or by holding salaries below inflation. A combination of the wage policy review and the outcome of the service and skills audit will assist in developing clear strategies to contain personnel expenditure in the medium to long term. Twill be conducted in full consultation with unions and their proposals in this regard will be highly welcomed.
Structural problems with conditions of service for public servants
The structural problems inherent in the current conditions of service for public servants makes it particularly difficult to isolate the need for a comprehensive review of wage policy from the resolution of the current wage dispute. The wage policy process will help to:
Renegotiate the structure and regulations for overtime pay, which currently constitute 2% of provincial salaries and 4% of national departments;
The review, due to be completed by December, presents an opportunity for both government and unions to restructure wages in a manner more consistent with the demands of transformation as well as the workers need for more sustainable and equitable pay and benefits. Together government and the unions must share this process to design a more sustainable and manageable wage system to prevent disputes of this nature recurring in the future.
The current wage dispute
Negotiations for the 1999/2000 salary increases have been going on for the last seven months. Unions demanded an average 10% increase compared to the 5.7% voted by parliament. After numerous discussions, on the 6th of August, the labour caucus representing all 12 unions in the PSCBC presented the following demands:
1. 7.3% average increase plus 1% for educators
2. Employer to fund all research with regard to the development of a new salary system.
3. Government to place a moratorium on all retrenchments and to convene a job summit within 60 days
4. All employees who participated in the industrial action of 23, 29 and 30 July to be exempted from the application of the now work no pay principle
5. The Government must not provide a salary increase for members of the management echelon higher than the lowest percent for the rest of the Public Service
6. Labour to be granted effective participation in the budgetary processes leading to the improvement in condition of service vote, and
7. All public service employees to be exempt from paying tax on their increases for 1999/2000.
Our response to the above demands is as follows:
In addition to this increase, safety and security personnel and most health workers will receive an additional 1-3% increase as a result of Rank and Leg promotions, at an additional estimated cost of R600 million to the state.
Government did not take the decision to implement its final offer lightly. It was clear that the current negotiation process was failing to provide a resolution of the impasse, particularly in light of the recent demands of unions for the on application of "no work no pay", an end to retrenchments and the exemption of increases from income tax deductions. The balance of forces in the public service co-ordinating council was also indicating an unwillingness to settle from certain trade unions that were and still are insisting on arbitration as the only way to solve the current dispute. The current negotiations have taken place over a record 140 days, compared to an average of 79 days settlement period in the private sector.
Despite the successive failure of the negotiating parties to agree, we still called for a council meeting on the 12th August that was rejected by unions. It was only after unions rejected that call to return to the table that we decided that the only way to move beyond the current dispute and focus on the comprehensive review of wages in the public service was to implement our final offer as provided for in labour legislation.
The decision to implement signals neither arrogance nor an attempt to undermine collective bargaining. It is equally not an indication of how we want to bargain in the future or a message to the private sector to undermine collective bargaining.
As government we have acted according to the rules agreed in the Labour Relations Act. We have also in the course of the last seven months gone out of our way to ensure a settlement. We feel it is imperative that even in the midst of differences in approach, it is important that unions also conform to the agreed rules and agreements. Any attempt to engage in unlawful strikes, particularly in essential services, will result not onlylegal consequences for participants, but negatively impact on the rest of society. As we have done previously, we must indicate that no work no pay will be applied to all participants in the coming strike scheduled for the 24th of August.
Way forward
Our final offer is in no way a request for workers to sacrifice and accept below inflation increases. We believe that within current financial constraints, our final offer is fair as most workers, about 60% will receive increases within the range of core inflation and there are promising prediction that by year-end consumer inflation will average 6.2%
To prevent disputes of this nature in the future, it is important that we develop more effective strategies to manage personnel costs. This should include:
We regret the threat by unions to withdraw from further negotiations and consultation in the PSCBC. As government, we reiterate our commitment to continue co-operating, consulting and subscribing to the bargaining council process, where appropriate that unions will return to the PSCBC to prepare for the wage policy review and for consultation on the skills and service delivery audit.
It will be strange indeed if anyone calculated that by withdrawing from discussions on transformation - that by boycotting efforts to improve efficiency and effectiveness - they are punishing government. For our government to be strong enough to govern against interests that threaten democracy and social progress, we need, amongst others, strong and effective unions as a vital part of a vibrant and dynamic civil society.
As elected politicians and members of Parliament, we are expected to be exemplary and provide leadership to the nation. In the context of ensuring in the words of our President, tat "our practical actions ensure that none can challenge us", Cabinet recommends to all Political Parties that parliamentarians receive a 4% increase in salaries. This is a confirmation of an earlier Cabinet decision that parliamentarians receive an increase at the level of one percent lower than inflation (CPI -1).
As the President said in his opening address to Parliament:
"For us to succeed in our work, both as a government and as a people, will require that we approach the tasks ahead with all due seriousness and a sense of discipline which recognises the fact that all rights are accompanied by obligations."
"We are a nation at work to build a better life."
I Thank you