Cape Town – In the early hours of Friday morning, Cosatu unions which represent 52% of public sector employees signed a controversial new three-year wage deal.  While the new agreement gives the workers the 7% wage increase initially agreed and reneged on by government, it pegs future pay rises to Treasury estimates of inflation.

“So what this means is that if inflation is greater than 4.8% this year (the Treasury estimate), increases next year will be based on this with no clawback,” said Leon Gilbert, spokesperson for the PSA, largest of the independent labour unions.

“And inflation is already above that figure.”

The pay talks followed the government’s decision to reduce the initially agreed wage increase to 6.4% in order to “claw back” 0.6% overpaid in the final year of the previous three-year agreement. They began on Thursday night and continued until 02:00 in the morning.

When the meeting began, the demand by the combined unions was for the 7% to be reinstated and for the agreement which pegged future increases to actual inflation to be honoured. Government negotiators finally agreed to the 7%, but only on condition that the clause on inflation be replaced by one which has pay rises determined by Treasury estimates.

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