The 1999 Public Service Wage Negotiations: Establishing a New Principle
The government as employer has used the 1999 wage negotiations with its twelve public sector unions to unilaterally change the process of collective bargaining and to introduce a new principle. In his March budget the Minister of Finance allocated R3 billion to salary increases for all public service workers. A further R280 million was later added, making the Government's final wage offer R3.28 billion. In the wage negotiations Government negotiators did not engage in the accepted practice of collective bargaining but insisted that unions should merely negotiate in what proportions the R3.28 billion should be allocated to the different categories of workers. The Government was determined to get the unions to accept the principle that in the annual budget a set sum of money would be allocated for wage increases and that the total annual increase in the public service wage bill would no longer depend on the percentage negotiated buy unions during the process of collective bargaining.
The Government's determination to impose this new principle upon the unions is driven by its desire to implement the Growth, Employment and Redistribution (Gear) macro-economic policy. The primary aim of Gear is to reduce to as low a percentage as possible the Budget Deficit - the total annual Government expenditure (including expenditure on social services) over income from all forms of taxation and revenue. This macro-economic policy was recommended by the leading International bankers and has the blessing of the local Business community. But it is a policy that is already having disastrous consequences for wage-earners and has severely limited positive growth in hospital and justice services, education, strategies for crime prevention, and other social services that are essential for creating a better life for all South Africa's people.
The theory that underpins the macro-economic policy is that if the Department of Finance could determine ahead of time what Government's total annual expenditure would be then with tough fiscal policies, maximum tax-collection and monetary constraint it could fairly accurately maintain a declared budget deficit. The Minister of Finance could then offer reductions in company tax. The further theory is that companies would then use these tax savings to grow their businesses and stimulate the economy, thus creating more jobs. Economists also argue that a low company tax base and a policy of strict wage constraint would attract foreign companies to South Africa. That is why over the past few years company tax has been reduced from a high 45 Percent to the present 30 percent. Statistics sow that the gap between rich and poor has grown and that the tax base has been solidly reversed, with wage-earners contributing more than 40 percent of State revenue and Corporate South Africa less than half that amount. The primary aim of the Gear policy is to make the South African economy attractive to foreign investors in the hope that they will open businesses here and created jobs. But there is no evidence that the policy is succeeding. International companies have not streamed to South Africa. There has not been even a trickle. And if foreign companies were eventually to open businesses in South Africa they would do so at the expense of local workers. In addition, the tough flexible, uncompromising stance of Government in relation to its employees will encourage local Business to adopt the same stance in future wage negotiations. Furthermore, government's efforts to force the unions into accepting its wage determination is the thin edge of the wedge. Union capitulation now will make it easier for government next time, until wage negotiations become superfluous.
The news media heaped praise on the Minister of Public Services and Administration for her hard-line position in the wage dispute and refusal to make additional funds available for increases. But the Minister was in fact taking a stand determined in Cabinet and in line with the Government's macro-economic policy. When at the end of the march by an estimated 30 000 workers in Cape Town on 24 August a memorandum was handed over to the Minister she was flanked by the Ministers of Finance and Education. This was not a symbolic gesture to public sector workers but a message that the final offer of R3.28 billion and the decision to break off negotiations was a collective decision of the Cabinet. The print media commented on the favourable attitude that international investors would adopt towards South Africa after the Government's no-nonsense response to their employees' demands. In radio and television programmes economists were repeatedly asked whether they thought that the overseas investor community would be pleased with Government's standoff with the unions. The response was always in the affirmative. So the workers and the trade union leaders were cast as the bad guys, greedy and unsympathetic to the greater needs of the country. The Cabinet and members of parliament, the majority of whom had only a few years before themselves engaged in strikes, protest marches and other forms of industrial action in support of demands for higher wages for workers, were now the good guys.
Over the past five years the Finance Department has lowered the budget deficit by reducing spending on resources and infrastructure on social services, by retrenching workers, thereby reducing the wage bill, and by pegging wage increases to the annual inflation rate. As the inflation rate drops so wage increases drop. The 1998-99 inflation rate was 7 percent so Government was not prepared to give its workers increases above 7 percent. The inflation rate has now been put at 4.9 percent (?) so next year the Government will peg increases at 5 percent or lower. Inflation-related pay increases mean that workers spend close to 100 percent of their monthly income on the basic necessities of life. They have no excess money to build up savings for a deposit on a home. They cannot afford a motorcar nor provide them selves and their children with the comforts of life. Add to this the hundreds of thousands of jobs lost annually, with former wage earners having no money, and the economy must stagnate. In a capitalist economy the Government's macro-economic policy is counter-productive because savings are low, spending in the construction, household goods and motor sales areas are severely restricted.
In the 1999 Public Service wage negotiations stretching over seven months the unions first reduced their original demand for an across-the-board increase of 15 percent to 10 percent and were finally prepared to accept an increase of 7.3 percent for public sector workers with an additional 1 percent for teachers. The Government said it could not offer more than the R3.28 billion, which translated to a 6.3 percent wage increase for public sector workers and 7 percent for teachers. When the Public Sector unions rejected this offer the Government announced that it had terminated the negotiations and would implement its offer, back-dated to 1 July. The Minister of Public Services and Administration then displayed her total disregard for the real plight of thousands of low-paid workers in her department. In a cynical attempt to get the public to label the workers greedy she called upon members of parliament to accept a 4 percent annual increase. But people do not shop or pay rent or pay for their children's education with percentages. They pay with real money. And they pay with the money that they take home. All Members of Parliament receive, very many certainly do not earn, above R20000 a month. 4 percent of R20000 is R800. Thousands of public sector workers, even nurses and teachers, earn below or just above R2000 per month. 10 percent of R2000 is R200. So if these low-paid workers had received an increase of 10 percent they would still have got R600 less per month than the 4 percent increase to Members of Parliament. This gross inequality is dishonestly not revealed, creating an impression of great charity on the part of the MP's.
The irony of the government's tough, unsympathetic attitude to public sector workers is that it came at the same time as the new Minister of Education admitted that education was in crisis and that policies would have to be implemented to improve matters radically. It came also at the time the new Ministers of Justice and of Safety and Security were announcing moves to combat all forms of crime. These ministers obviously saw no connection between creating a satisfied worker corps and developing the instruments most likely to overcome the crises in their respective departments. The low morale evident amongst teachers, nurses and doctors, police, prosecutors, court interpreters and other workers in the public sector, and indeed in most areas of the economy, is the direct consequence of job insecurity, low pay and work overload that results in stress. Workers who are treated with contempt by their employer cannot be expected to commit themselves to maximum productivity and loyalty to the greater good of the country. This is a fact of life in any capitalist economy. That is why the top directors of companies are offered production bonuses or lucrative share options over and above their remuneration packages. These additional benefits are never offered to workers. Cabinet ministers constantly comment on and question the decline in moral and ethical standards in the country. But they seem to be at a loss as to how to lift the country's people to higher standards of social conduct. Only a fundamental transformation of the socio-political and economic system will finally achieve that goal. In the present system a hard-line, no-nonsense, inflexible, uncompromising relationship with workers is the wrong tactic to employ.
It is no wonder that millions are questioning the ability of the Government to govern effectively and to transform the country. That is most likely why an estimated two million fewer votes were cast in 1999 than in 1994. Workers are fast beginning to realise that the present government is inextricable tied to international finance and will cater to the needs of those with the profit motive. The desire of workers for a wage that will enable them to satisfy even the basic needs of their dependents seems to be of less than secondary importance to the Government, their employer.
[THE EDUCATIONAL JOURNAL VOL.69 #5, OFFICIAL ORGAN
OF THE TEACHERS' LEAGUE OF SOUTH AFRICA, SEPTEMBER - OCTOBER 1999]
EDITOR: Mrs. HN Kies, 15 Upper Bloem Street, Cape Town, 8001
Go to MTA's HomePage - Do not pass BEGIN, Do not collect R200.
