Public-sector wage demands will cost R20bn

Finance Minister Nhlanhla Nene said will increase government spending by about 1.5 percent.

FILE: Finance Minister Nhlanhla Nene flanked by SARS Commissioner Tom Moyane, Deputy Minister of Finance Mncebisi Jonas, and DG Lungile Fuzile after his first Budget Speech in Cape Town on 25 February 2015. Picture: GCIS.

JOHANNESBURG Wage demands by South African public-sector unions would cost the government an extra R20 billion over the next financial year, says the country's finance minister, as workers threaten mass protests in a push for higher pay.

Unions are seeking a 10 percent pay rise. That would increase government spending by about 1.5 percent in 2015/16, Nhlanhla Nene said in a written response to parliamentary questions on Thursday.

The government is offering an inflation-linked 5.8 percent rise in a three-year deal to replace the existing agreement, which expired on 31 March.

The drawn-out wage talks are putting more pressure on Africas most developed economy, which is already suffering from widespread power shortages and high unemployment.

Any wage increase greater than the 5.8 percent inflation rate that the government offer is based on cannot be financed through debt issuance, Nene said. The government would need either to reallocate funds from elsewhere or cut jobs, he said.

The Treasury has repeatedly said current levels of debt are unsustainable, at around 40 percent of gross domestic product.

On Friday, a union representative told Reuters that around 20,000 government workers were planning a march on 23 April to press their wage demands.

If we do not get what we want, that march will be followed by other actions that we still have to decide on, said Mugwena Maluleke, a spokesman for trade union federation Cosatus public sector affiliates.