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12.20.20 | Wage Agreement Public Sector

The needs of a small group of public sector workers, who have smart jobs with stable incomes, do not outweigh the needs of millions of South Africans who may be vulnerable during economic times, the labour court said when it rejected a union request to force the government to pay its wage increases until 2020. In a harsh ruling against public sector unions, the court ruled that the increase decided for the third year of the agreement was illegal and rejected the labour application to compel the government to implement it. The Ministry of Finance stated in court that it had not agreed to the availability of the funds and, since they were outside the clearing framework, it had not authorized them to ensure that two public service rules had not been complied with. In early December, the Labour Court of Appeal heard arguments in the case in which public sector unions attempted to implement the final stage of a multi-year wage agreement. The verdict is a victory for the government and the Department of Finance, which argued that the wage increase would cost the state an additional R$3.2 billion. The payroll is the most important item in the budget and one of the reasons why SA`s creditworthiness was downgraded to the trash by Moody`s and Fitch last month. In the electronic decision, the Tribunal found that there was no valid agreement with the unions in 2018 because it did not comply with the provisions of the Constitution and the rules of the public service. Regulation 79 deals with collective bargaining and provides that the Department of Finance must allocate funds if the public service and administration does not have enough in its budget or must approve it to remove it from other households. None of this happened in this case. The remuneration of public sector employees has increased by an average of 7.2% per year over the past five years, well above inflation. The unions argued that the fact that the Department of Finance did not approve the funds did not matter, since the Minister of Finance was part of the cabinet that approved the agreement. The court ultimately ruled that the application of the clause in the agreement was illegal because it was contrary to the Constitution and Regulation 78 and 79 of the Officials Regulation. For these reasons, the unions` application was denied because the court decided that there was no valid agreement on which they would have based their right.

The government made the decision as part of a plan to reduce the state payroll by R160 billion over the next three years. Implementation of this year`s wage agreement would require the government to detect some R37 billion to pay public servants. The government is not required to pay increases to public sector employees after the Labour Court of Appeal gave it a significant profit by declaring the implementation of a controversial agreement illegal, BusinessLIVE reports.