INDEPENDENT LABOUR CAUCUS (ILC): DRAFT WAGE DEMAND: 2015/16

Transcription

1 INDEPENDENT LABOUR CAUCUS (ILC): DRAFT WAGE DEMAND: 2015/16 1. Introduction PSCBC Resolution 1/2012 that inter alia determined the salary increases for 2012, 2013 and 2014 lapses on 31 March The Principals of Labour decided that a combined Labour demand should be submitted to the employer by the end of June 2014 so that the demand can feed into the state's budgetary process for For this purpose the ILC needs to determine its demand to be combined into a Labour demand. It is proposed that the following issues be considered as part of the ILC s demand. 2. Term of Agreement Considering the period to 2007 it appears that public servants have generally received higher increases (than the established practice of CPI+1%) in terms of single term agreements or in the first years of multi-term agreements. The first term of a multi-term agreement is very similar to a single term agreement in that it is not definitively linked to CPI plus a certain percentage. Negotiation forces are more prevalent in these instances. The following table illustrates this point: Year Term Increase received Actual average CPI (April-March) Actual average CPI + 1% % gain(+)/ loss (-) against average CPI % gain(+)/ loss (-) against average CPI + 1% 2007/08 Multi (first year) 7,5% (1 July 2007) 8% 9% 0,5% (-) 1,5% (-) 2008/09 Multi 10,5% (1 July 11,1% 12,1% 0,6% (-) 1,6% (-) 2008) 2009/10 Single 11,5% Average (1 July 2009) 6,4 % 7,4% 5.1% (+) 4,1% (+) 2010/11 Single 7,5% (1 July 2010) 3,8% 4,8% 3,7 (+) 2,7% (+) 2011/12 Single 6,8% (1 May 5,5 % 6,5% 1,3% (+) 0,3% (+) 2011) 2012/13 Multi (first year) 7% (1 April 2012) 5,5% 6,5% 1,5% (+) 0,5% (+) 2013/14 Multi 6,6% (1 April 5,8% 6,8% 1,2% (+) 0,2% (-) 2013)

2 2 The benefit of multi term agreements is that it creates longer periods of labour stability and allows parties the opportunity to focus on issues other than salary improvements. The latter is true in theory but not necessarily in practice. There are currently still 12 issues outstanding from PSCBC Resolution 1/2012. Since 2012 the parties to the PSCBC have concluded 4 Resolutions of which only one (the Service Charter) emanates from Resolution 1/2012. In view of the above it is proposed that the ILC supports a single term agreement for 2015/ Salary Increase 2015/16 (1 April 2015) Since 2007 it has become an established principle in multi- term agreements that salary improvements for the outer years are based on the average projected CPI +1%. It is accepted that this now forms the basis from which salary negotiations will commence, whether for multi- term or single term agreements. Although there are many institutions that make pronouncements on the projected CPI for future years, parties have been utilising the projections of National Treasury exclusively when it comes to multi-term agreements. It is believed that these projections are sound and that there is no reason why it should not also be utilised as a basis for the negotiation of single term agreements, unless it proves to be too conservative compared to the projections of some of the other institutions, in which case the more favourable ones should be used. A problem experienced with projections is that they are in the main limited to a calendar year, whereas the salary improvements in the public service are normally based on the average projected/actual CPI for the period 1 April in a particular year to 31 March in the next year. National Treasury provides projections for both the calendar year and a financial year. The latter runs from 1 March to 28 February the following year and is therefore the projection that corresponds the closest to the salary improvement period of the public service (1 April-31 March). Information sourced regarding projections in respect of the average CPI for 2015 are the following: Institution Projected CPI: 2015 National Treasury 5,9% (Calendar year) 5,7% (Financial year)

3 3 Reserve Bank 6% BER - average of respondents surveyed 6.1% (Varies between 5, 5% - 6,5%) PWC 5,0% Reuters - survey of financial analysts 5,5% Chief Economist FNB 5,4% In view of the above it is clear that the National Treasury forecasts are sound and in line with what other experts are predicting. Based on the National Treasury projection for the 2015/16 financial year and accepting that CPI+1% has become the norm (base) for salary improvements in the public service, the minimum salary increase for 1 April 2015 should therefore be 6,7% (National Treasury projection of 5,7% for the financial year + 1%). As indicated, single term agreements or the first year of multi-term agreements generally tend to yield higher returns. The acceptable increase for 1 April 2015 should therefore exceed 6,7%. In view of this and to create space in the negotiation process it is proposed that the ILC submits a salary demand of 10% for 2015/16. It is further proposed that if in the negotiation process the salary increase is linked to the projected CPI the normal safety net be built into the agreement in terms of which the difference between National Treasury s average projected CPI for 2015/16 and the actual CPI for the period (if the actual CPI is higher) should be added to the salary improvement for the next year. In terms of PSCBC Resolution 1/2012 s safety net the difference between the projected CPI and the actual CPI for 2014/15 (if the latter is higher) would need to be added to the negotiated improvement for 2015/16. It should not be accepted that it was already factored into the negotiated salary improvement for 2015/16, but should become a further top-up. Labour would need to demand the top-up after the 2015/16 improvement has been implemented. 4. Medical Aid Subsidy The medical aid subsidy for members of GEMS was last improved in 2011 when it was adjusted to the monthly monetary tax cap. Despite indications from the MPSA that the medical subsidy would be adjusted there has been no adjustments in 2012 or The Minister has also failed to respond to written queries/reminders from the ILC in this regard. With effect from 1 March 2012 the medical scheme contribution deductions for tax purposes (linked to the tax cap) was replaced by a medical scheme fee tax credit to achieve greater equality in the treatment of medical expenses across income groups. According to GEMS

4 4 there is, however, no link between GEMS and the tax credit benefit granted by SARS. In other words the Employer cannot claim that the awaited increase in the medical subsidy for GEMS members since 2012 has been offset by a greater tax benefit due to the introduction of medical scheme fee tax credits. In view of the above a demand should be tabled for an increase in the medical aid subsidy that will cater for medical inflation for the period According to information from Statistics South Africa medical inflation in respect of medical services was 6,4% in 2012 and 6,3% in This is respectively 0,8% and 0,6% higher than headline inflation for the 2 years. Medical inflation figures for 2014 and 2015 are obviously not available at this stage. If National Treasury s projected CPI for the 2014/15 and 2015/16 financial years be used as a guideline another 6,2% and 5,7% respectively should be added for these 2 years plus an additional 0,7% for each year (i.e. the average % percentage that medical inflation was higher than headline inflation for 2012 and 2013). To bring the subsidy on par with what it would have been if the above-mentioned increases had been effected year-on- year (i.e. to cater for the compounded effect) another 2, 5% would need to be added. Based on the above, it is proposed that unless the MPSA implements medical subsidy increases for before the 2015/16 agreement is concluded, the demand in respect of an increase in the medical subsidy should be 28, 5% with effect from 1 April 2015 calculated as follows: , 4% , 3% , 2% , 7% Additional for , 7% Additional for , 7% Additional for compounded effect - 2, 5% Total 28, 5% This figure is not excessive if compared to the actual weighted average contribution increase for GEMS which was 8, 7% for 2014 alone. 5. Housing Allowance

5 5 In 2012 Labour demanded that in the absence of the implementation of the Government Employees Housing Scheme (GEHS) with effect from 1 April 2012 the Housing Allowance be increased to an amount of R 1650 p.m. In the negotiation process parties eventually agreed to a Housing Allowance of R p.m. It is two years hence and the GEHS has still not been implemented. Although position papers on the GEHS have been submitted to the PSCBC by parties and although presentations have been made in respect of the matter, substantial work still needs to be done before the Scheme will be up and running. At this stage details remain sketchy. The Principals of Labour are in agreement that the introduction of the GEHS should not deny employees the benefit they enjoy in terms of the Housing Allowance and that the GEHS should only improve on what employees currently receive. From the limited information available it appears that the Housing Allowance will be carried into the GEHS in terms of bond repayments / rent-to-buy options, etc. With this in mind it is proposed that the demand for a Housing Allowance of R p.m. be re-instated so as to place employees in a stronger position when they access the Housing Scheme. The recent increase in the repo rate (more increases are predicted) and the subsequent increase in the bond rate adds motivation for an increase in the Housing Allowance. 6. Outstanding issues from Resolution 1/2012 and other Resolutions There are still a number of outstanding issues from PSCBC Resolution 1/2012 that have not been addressed or have only been partially addressed. These issues are reflected in Annexure A. Over and above these issues the ILC is still battling the MPSA to implement certain provisions emanating from PSCBC Resolutions 4/2010 and 2/2011 relating to GEMS. These pertain to the continued free medical assistance for post-retirement employees who were on salary levels 1-5 on the Sapphire option as well as the alignment of post retirement medical assistance with the pre-retirement medical assistance for all GEMS members. The Principals of Labour resolved that June 2014 should be targeted to finalise all the outstanding matters from Resolution 1/2012 and that it should not be taken into the next round of wage negotiations. In the event that this might not happen and to cover Labour it is proposed that it be demanded that all outstanding issues from Resolution 1/2012 and other Resolutions that are not finalised at the date of signing of the 2015/16 wage agreement be finalised and implemented during 2015/ Summary

6 6 In summary it is proposed that the ILC s demands for 2015/16 be the following: A single term agreement A salary increase of 10% with effect from 1 April 2015 A safety net be built into the agreement (if required) A 28,5% increase in the medical subsidy for members A housing allowance of R 1650 p.m. Finalisation and implementation of all outstanding issues from PSCBC Resolution 1/2012 and other Resolutions not yet finalised at date of signing of the agreement.