The majority of South Africa’s public sector unions on Friday agreed to a 7.5% wage increase after five months of strike action, the government said in a statement.
The two-year, multi-term deal is significantly higher than what the government had factored into its 2023 budget and will put efforts to manage runaway public spending at risk, experts warned earlier.
The unions in the public sector represent approximately 1.3 million workers and had been taking part in varying degrees of demonstration since November 2022.
Salary negotiations began in May, with unions initially demanding a 10% increase which the government rejected.
In subsequent negotiating rounds, the unions reduced their demands to an 8% increase and the continuation of a monthly 1,000 rand ($54.71) cash payment.
The final settlement will see the cash gratuity continued for one year, the government said.
The cost of the agreement is estimated at 37.4 billion rand in 2023/24, South Africa’s treasury department said in a statement, adding the risk of the outcome of the wage bill negotiations on the country’s fiscal outlook has now materialised.
“Government will initiate processes to ensure that the latest wage agreement is implemented through significant trade-offs in the short-term and over the medium-term,” the treasury said.
The public sector wage bill makes up about a third of total government expenditure. The treasury had factored in an annual increase of 3.3% to 2025/26.
