Wage+talks+delay+bigger+debate,+Hilary+Joffe,+B+Day

Business Day, Johannesburg, 15 May 2007
=Wage talks delay bigger debate about nature of public service=


 * Hilary Joffe**

THOSE watching as SA’s public sector trade unions gear up for a possible strike over the government’s refusal to grant their demand for a 12% pay hike, may be surprised to know that the government is already planning to increase its wage bill by more than that this year.

In his February budget, Finance Minister Trevor Manuel pencilled in a 12,5% increase for “compensation of employees” in the current fiscal year, with increases of nearly 9% to follow in each of the next two years. But the changes in the wage bill that it is budgeting for are very different from the changes the public sector unions want to see. And therein lies a debate that lurks behind the wage talks — what kind of public service do we want for SA?

Both sides talk about the need to improve service delivery, but differ on what it might take to achieve that. The government wants to limit the base pay increase to 6% so it can put more money into specific measures to attract and retain skilled professionals — from teachers, nurses and doctors to detectives, prosecutors and engineers. It also plans to hire tens of thousands more police and healthcare workers to boost capacity in priority areas. The union bloc, by contrast, is keen to raise living standards and narrow the wage gap further. It seeks the abolition of the bottom two pay levels, but ironically also proposes a new salary structure that government negotiators say would increase the ratio of highest-to-lowest paid to 17 to 1, from the current 5,5 to 1.

A key difference between SA’s public and private sectors is the wage gap, which is significantly narrower in the public sector, because those at the lowest levels earn more than their private sector peers, while those at the top earn less. And that, arguably, is the trouble with SA’s public service. We have, in a sense, the worst of both worlds. In theory, we might aspire to a relatively small but well paid, highly skilled public service that does well at delivering services such as crime-fighting, education and public health. We don’t have that. But nor do we have an extensive bureaucracy that provides lots of jobs for low-skilled people — the kind SA’s growing economy is finding it difficult to absorb.

SA’s public service is small by global standards. It employs only about 9% of the work force, compared with about 14% in Latin America, 11% in east Asia and 17% in industrialised countries, according to the Human Sciences Research Council. Nor is it a bloated bureaucracy dominated by pen-pushers: of the 1,1-million public servants, more than 900000 are service staff in education, health, policing, prisons and defence.

But the lowest paid of these earns just less than R36000 a year (R3000 a month) in basic pay, not including the free medical aid, pension contribution and housing subsidy that can add more than 50% to the basic pay packet. More than two-thirds of SA’s workforce earns less than R2500 a month, so even the poorest of the workers on behalf of whom the unions are negotiating are in SA’s top 30%. Not that there are many of those: only about 20000 workers are at salary level one, mainly cleaners and gardeners, and a further 200000 or so at level two. But shedding those two levels, as the unions demand, would raise the minimum annual basic pay in the public service to R46200. It could be argued this would be good for the labour market, setting a decent benchmark even for low-skilled jobs.

Realistically, though, how many posts for unskilled or even semiskilled workers is the state going to create at R4000 a month? The public sector could, in theory, add large numbers of jobs and improve services by hiring more people to clean streets, wheel trollies round hospitals and fix toilets and windows in schools. In practice, that’s not likely to happen at these wage rates. Such jobs are more likely to be outsourced or hived off to the public works programme.

As problematic is the higher end of the scale, where even if the state manages to recruit the skills it needs, it struggles to keep them. Though the unions argue that pay has not kept pace with inflation, that masks big differences within the scale, with pay rising much faster for lower-skilled employees than for higher skilled ones, reflecting efforts to narrow the wage gap. In the past decade, pay adjustments have been below inflation for categories nine to 12, which includes doctors and engineers, school principals and pilots, as well as more senior nurses and teachers. The state has been hiring many more managers and senior people in recent years, but unless it can offer competitive packages, it’s unlikely to get quality, nor will it hold on to those who are really good. Which is why it wants to target priority areas, rather than awarding large percentage increases to all. Not that it can’t afford the percentages — as the budget figures indicate and as the unions have no doubt noted — in this year of fiscal surplus.

But it’s a question of where that money can best be used to turn an underperforming public service into a more effective one. That’s the debate that should be happening. But with tensions increasing, this might not prove to be the time.


 * Joffe is chief leader writer.


 * From: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A463054**

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