UPDATE ON LOCAL GOVERNMENT SALARY AND WAGE NEGOTIATIONS (UPDATE 5-2024): FACILITATORS’ PROPOSAL

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Members will recall that we previously provided feedback reports after the first and second rounds of the salary and wage negotiations for the local government sector.

This serves to provide an update on the third and final round which has concluded with the issuing of a facilitators’ proposal.

The key aspects of the facilitators’ proposal can be summarised as follows:

1.         Multi-Year Agreement

A 5-year salary and wage agreement for the period 1 July 2024 to 30 June 2029.

2.         Across the Board Salary Increase

Salary Increases:

Salary increases for the 5-year agreement will be as follows:

•           Year 1 (2024/2025): An across the board increase of 6%, structured as follows:

            4.5%   (backdated from 1 July 2024) plus an additional 1.5% on 1 March 2025.

•           Year 2 (2025/2026): CPI plus 0.75% payable from 1 July 2025.

•           Year 3 (2026/2027): CPI plus 0.75% payable from 1 July 2026.

•           Year 4 (2027/2028): CPI plus 1.25% payable from 1 July 2027.

•           Year 5 (2028/2029): CPI plus 1.25% payable from 1 July 2028.

Method of Calculating CPI:

The average CPI as published by STATS SA for the period February (of the preceding year) to January  (of the current year) shall be used to determine the wage increases for years 2-5 of the agreement.

The previous method, which applied the Reserve Bank’s CPI estimates, has been discarded, due to the Reserve Bank’s estimations no longer being reliable.

Deeming Clause:

If CPI falls below 4% in years 2-5 it will be deemed to be 4%. Similarly, if CPI rises above 7%, it will be deemed to be 7%.

This effectively means that salary increases, in years 2-3 of the agreement, cannot be lower than 4.75%, and in years 4-5, cannot be lower than 5.25%.

3.         Benefits and Conditions of Service linked to Salaries

All salary linked benefits and allowances shall increase as follows:

•           1 July 2024: by 4.5%; and

•           1 March 2025: by an additional 1.5%.

Thereafter, these salary linked benefits and allowances shall increase by the same percentage as the salary increases for years 2-3 (CPI + 0.75%) as well as years 4-5 (CPI + 1.25%) of the multi-year agreement.

4.         Minimum Wage

The current minimum wage of R9 531.54 shall increase as follows:

•           1 July 2024: by 4.5% to R9 960.45; and

•           1 March 2025: by an additional 1.5% to R10 109.85.

Thereafter, the minimum wage shall increase by the same percentage as the salary increases for years 2-3 (CPI + 0.75%) and years 4-5 (CPI + 1.25%) of the multi-year agreement.

5.         Maximum Medical Aid Subsidy

The current maximum (cap) of the medical aid subsidy, of R5277.38 shall increase by 4.5% to R5 514.17, with effect from 1 July 2024.

Thereafter, the cap shall increase by the same percentage as the salary increases for years 2-3 (CPI + 0.75%) and years 4-5 (CPI + 1.25%) of the multi-year agreement.

This increase shall be applicable only to employees who belong to accredited medical aid schemes.

6.         Home-Owners’ Allowance and Related Matters

Home-Owners’ Allowance:

The flat rate home-owners’ allowance shall increase by 4.5% to R1109.07, with effect from 1 July 2024.

Thereafter, the allowance shall increase by the same percentage as the salary increases for years 2-3 (CPI + 0.75%) and years 4-5 (CPI + 1.25%) of the multi-year agreement.

GAP Market Employees:

All Gap Market employees shall receive a once off, non-pensionable, payment in the amount of R 2 000.00. This amount must be paid by:

•           31 December 2024, but where this is not possible;

•           By no later than 31 May 2025.

This payment is applicable only to employees who earn R22 000.00 per month or less as at 1 July 2024, and who do not currently receive a Home-Owners’ Allowance.

Housing Investigation:

The SALGBC parties shall conduct an investigation to consider ways in which access to housing can be improved for local government employees.

This investigation must be concluded by 31 March 2025.

Serviced Stands:

Trade Unions may table proposals, at LLF level, for municipalities to provide access to serviced stands for employees to build homes. However, providing such access shall be within the discretion of the municipalities.

7.         Maternity, Paternity and Adoption Leave Benefits

Any further negotiations on improvements to maternity, paternity and adoption leave benefits will be dealt with as part of the Main Collective Agreement negotiations.

8.         Productivity Statement

A productivity statement is included that links the wage increases to the promotion of optimal municipal performance and higher levels of productivity in local government. Service delivery is the focal point of the agreement.

The parties, moreover, commit to engage on methods to optimise productivity through the implementation of the 2016 Service Charter and the Professionalisation Framework for the sector.

9.         Exemptions

The exemptions procedure is amended to provide for new time frames for submitting exemptions and a new process of mediation prior to the commencement of the exemption hearing.

Time frames:

All exemptions must be submitted by municipalities as follows:

•           Year 1:  Within 45 working days of the signature of the Agreement;

•           Years 2-5:  Within 30-days of the municipal budget being approved or 30 June, whichever is the soonest.

In the event of a failure to comply with these times, an application for condonation must be made.

Mediation:

Once an exemption application is received, the SALGBC must first follow the following 3-steps:

Step 1:  Appoint a mediator who must attempt to resolve the application by mediation within 30-days.

Step 2:  If mediation succeeds, the settlement agreement must be issued as an exemption outcome by consent. If mediation fails, proceed to step 3.

Step 3:  Appoint an exemption panellist together with a financial expert. The panellist must hear and determine the exemption application with 30 days of appointment.

[Note: An exemptions procedure is a legal requirement and must be included in all SALGBC collective agreements. Our focus in the negotiations was to keep the requirements for exemption as fair and reasonable as possible and to ensure that firm deadlines for submitting exemptions are included.]

10.       Return Date

All parties must begin their mandating processes and indicate their acceptance or non-acceptance of the facilitators’ proposal by 14h00 on 2 September 2024.

11.       Disclaimer

The aforesaid content is a summary of the facilitators’ proposal. The facilitators’ proposal can be viewed here.

12.       Way Forward

The facilitators’ proposal is effectively a set of recommendations from the facilitators to provide a basis for settling the wage negotiations. Therefore, the proposal is not binding and each party is free to accept or reject it. The proposal will only become binding if all the parties agree thereto.

The proposal has been issued at a point where negotiations have been exhausted and is essentially a last ditch effort to settle the matter. No further meetings have been scheduled and negotiations have essentially come to an end. This means that there can be no expectations of any further improvement on the proposal or further negotiations.

It is important to note that the facilitators’ proposal has been framed as a “package deal”, which means that it must either be accepted or rejected as a whole. Parties cannot choose which parts of the proposal they prefer.

If IMATU accepts the proposal, and if the other parties also accept it, the wage negotiations will be regarded as closed and a collective agreement will be concluded and signed, in order to implement the terms of the proposal.

However, if IMATU rejects the proposal, the matter cannot be further negotiated. The only option would be to refer a dispute for conciliation, whereafter, the matter would have to be resolved by strike action or interest arbitration. These options are, however, inherently risky and success is by no means guaranteed.

It should also be noted that these wage negotiations were conducted in a difficult economic environment, in which the financial position of municipalities have played a significant role in the outcome thereof. The facilitators’ had to properly balance the financial needs of employees with the financial constraints of municipalities in order to construct the facilitators’ proposal.

Taking the above into account, the negotiators are of the view that the facilitators’ proposal provides a constructive basis for a settlement.

13.       Conclusion

The Parties are required to either accept or reject the facilitators’ proposal by 2 September 2024.

If all parties accept the facilitators’ proposal, then a special Bargaining Committee meeting will be convened for 6 September 2024, to vote on the acceptance of the collective agreement as prescribed by the Constitution of the SALGBC.

IMATU’s National Executive Council accepted the facilitators’ proposal in-principle, subject to IMATU Regions being consulted on the facilitators’ proposal.

Regions have until 30 August 2024 (at 13h00) to submit whether they concur with the National Executive Council’s in-principle acceptance of the facilitators’ proposal, and if not, to submit full reasons.

Further updates will be provided as the matter unfolds.