salary

WAGE NEGOTIATIONS 2018/2019 (FEEDBACK REPORT NO 2)

salaryThe second round of wage negotiations for the 2018/2019 financial year took place on 31 January – 2 February 2018, in Durban, under the auspices of the facilitator, Mr Moe Ally.
Hereinafter follows the feedback report.

The facilitator indicated that he prepared a document which outlines all the bargaining items and the positions of the parties on each item. The parties spent most of this round setting out the factors to be considered in order to reach an equitable settlement on each item.

The facilitator also separated the parties and shuttled back and forth to enter into debate with the parties in caucus format.
Each bargaining item was dealt with as follows:

Across the Board Salary Increase
The parties’ positions on this item, at the start of negotiations, were as follows:
IMATU 15%
SALGA 4.6%

IMATU led the way in establishing a basis for determining the salary increase and stated that while CPI is a good starting point to determine the across the board salary increase, it cannot be the only factor. The direct impact of inflation on important items in the basket of household spending must also be taken into account. Historical agreements have provided a minimum baseline for salary increases. Moreover, recent increases granted to councillors, settlement figures of other sectors and local government increases versus the national average are all factors which should be taken into consideration to determine the salary increase.

IMATU further proposed a review of the traditional lagged CPI approach to determine the salary increase, i.e. the average CPI of the previous financial year. Instead, parties should consider using the projected CPI, as determined annually by national treasury. It is far more accurate and realistic and reduces the risk of a low CPI being carried over into a high CPI year.
SALGA responded that the trade unions should carefully weigh the risks in such an approach as it may not always be advantageous. SALGA further maintained that all notch increases should, in future, no longer be automatic but linked to performance.

IMATU indicated that, while it does not oppose measures to improve employee performance in the sector, linking notch increases to performance will essentially impact on contractual rights which will be negatively affected if dealt with as an interest issue. Furthermore, COGTA is already developing performance regulations which have their own performance rewards systems. There are also many perceived problems with performance management systems in the sector, including its subjective nature. The sector would be better served if parties focus on improvement in service delivery as a whole and an investigation should be conducted into this matter.

SALGA was of the view that the salary increase cannot be determined in isolation. There are many other concurrent processes under-way in the SALGBC, such as the housing investigation, low cost medical aid investigation and pension fund restructuring, which may also have significant cost implications for municipalities. All these financial risks must be taken into consideration in determining the salary increase.

Housing Allowance
The parties’ positions on this item, at the start of negotiations, were as follows:
IMATU ▪ Increased to R 2000.00 p/m ▪ Extended to all employees
SALGA ▪ Increased by same percentage as salary increase ▪ Opposed to Rental Allowance ▪ Housing investigation expedited

The facilitator was of the view that the parties agree, in principle, that home ownership must be promoted in the sector and that the allowance must increase. It is the quantum of the increase that is in dispute.

IMATU remained adamant that the base of the current housing allowance must first be increased, after which an annual increase, by the same percentage as the salary increase, can be considered. SALGA’s proposal is not realistic as the allowance is simply too far behind other sectors, including the public sector. IMATU proposed that the average increases, in rand value, recently granted to councillors in terms of the government gazette be used as a reference point to determine the increase to the base. Moreover, the distinction between home owners and renters is discriminatory and must be eliminated in the sector. For this reason, it is proposed that the housing allowance be extended to all employees in the sector.

Maximum Medical Aid Subsidy
The parties’ positions on this item, at the start of negotiations, were as follows:
IMATU ▪ Maximum Subsidy Maximum subsidy to increase annually by same percentage as salary increase ▪ 60/40 contribution rate be retained.
SALGA ▪ No increase to maximum subsidy.

IMATU proposed that this item be removed from the agenda and that the provisions of the Main Collective Agreement, which provide for annual increases to the maximum medical aid subsidy, prevail.

SALGA indicated that it is prepared to consider annual increases to the medical aid maximum subsidy by the same percentage as the salary and wage increase. However, this may result in some cost shifting when the salary increase is ultimately determined.

Retirement Funds
The parties’ positions on this item, at the start of negotiations, were as follows:
IMATU
SALGA ▪ Maximum employer contribution rate to DC Funds at 18% ▪ Contribution rates higher than 18% be ring-fenced ▪ No further entrants into DB Funds ▪ Restructuring process in SALGBC to be completed.

The facilitator was of the view that this item can be readily dispensed with as all parties are, in principle, in agreement on these issues, with some minor changes that can be deferred to a later stage.

Duration of Agreement
The parties’ positions on this item, at the start of negotiations, were as follows:
IMATU ▪ Term of agreement 1-year agreement.
SALGA ▪ 5-year agreement ▪ Formula for salary increase in years 2-5 of the agreement be based on average CPI plus 0.25%

IMATU indicated that it has always been SALGA’s responsibility to make a multi-year agreement offer that is attractive enough to consider. Effectively, SALGA must “sell” a multi-year proposal to the trade unions. This should include sufficient protections against major unexpected shifts in inflation, measures to ensure that the increases remain in line with the national average and traditional protection clauses with a threshold of 5% (floor) and 10% (ceiling). That being said, IMATU was of the view that it is highly unlikely that the trade unions would obtain a mandate to accept a 5-year agreement. SALGA should rather bring their proposal in line with historical trends in the sector.

Conclusion
As is evident from this feedback report, the parties not yet made any moves from their original proposals, but the facilitator has been provided with all relevant considerations from which an equitable settlement can be concluded. Negotiations are ongoing and the next round of wage negotiations is scheduled for 5, 6 and 7 March 2018, in Durban. It is expected that parties will make adjustments to their bargaining positions at the next round.

Members will be continually updated as the matter progresses.