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Public servants to vote on 7% wage hike offer

Cape Town - South African public servants are voting this week to decide whether to accept a final wage hike offer of 7% from the government and possibly avert a crippling strike which the economy can ill afford.

A work stoppage by the 1.3 million nurses, teachers, police officers and other public servants could dent investor sentiment and slow economic growth as South Africa struggles with biting power cuts affecting its key mining and manufacturing sectors.

The government is under pressure to reign in wage hikes that are higher-than-inflation, which Finance Minister Nhlanhla Nene has warned are unsustainable.

READ: Government raises wage offer to 7%, union says

Friday is the deadline for agreement to be reached between the unions and the government, as well as the final day left for mediation, which was extended after a month-long third-party mediations failed to broker a deal.

"We are currently consulting with our members," Leon Gilbert, spokesperson for the largest independent public servants union with around 220 000 members, told Reuters on Tuesday.

"The D-Day for input back to us is Friday and members will decide if we accept the offer or not."

Under the proposed increases, the state has offered to adjust salaries in the second and third years to average South Africa's projected consumer price index (CPI) plus one percent.

For the first year it proposes average projected CPI, forecast by Treasury at 4.8%, plus a 2.2% adjustment.

Besides the salary hike, government has also offered a medical aid increase of 28.5% and a housing allowance of R1 200.

Unions had originally wanted 15% wage increases but then revised that down to 10% which remained its official tabled position.

The Treasury has said South Africa's economy remains on the back foot and growth for 2015 could halve to 1% from a projected 2%, should power constraints worsen. The country is battling with the worst supply shortages since 2008.

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