ALLAN SECCOMBE, Johannesburg | Tuesday 3.40pm.
PUBLIC sector workers and the government on Tuesday began talks on a new wage deal which economists say could increase inflationary pressures if the unions’ demands are met.
The government has offered a five percent increase, but the unions want between nine and 16%.
The talks between the government and 12 unions representing about 1,1-million nurses, teachers, police and civil servants are to set public sector wages for 2000/2001.
”The way things stand now we are so far apart that it will take quite substantial negotiations to move us anywhere,” said Anton Louwrens, chief negotiator for the Public Servants Association.
Econometrix economist Tony Twine said the government will have to borrow heavily to finance the unions’ demands. ”If the government accedes to those demands the government deficit would expand heavily. That would imply the government borrowing more and the creation of the credit to do that would be inflationary,” Twine said.
The government has said increases should be linked to inflation and fall within the state’s medium-term expenditure framework. Finance Minister Trevor Manuel’s 2000 budget has capped the public-sector wage increase at 5,5%.
The government-proposed increase will fall just under the average headline inflation rate of 5,2% in 1999, but is far below the core inflation rate some unions prefer to use which stood at 8,6% in April.
Union officials said their wage demands are justified after government ministers voted themselves a 12% increase this year.
Wage negotiations between the government and its employees ended bitterly last year when the government unilaterally imposed a 6,3% increase after it rejected the 7,3% inflation-linked rise demanded by the unions.
The unions responded by staging one of the country’s largest strikes since 1994 — a one-day work stoppage by an estimated 570000 workers in August. — Reuters