The price of living has gone up, and the income has accompanied another wave of dissolution that now finds a wage agreement for more than 1.2 million public-sector workers that merely qualified for relief at the government level in South Africa. The Public Service Coordinating Bargaining Council (PSCBC) is expected to approve a merit-based remuneration rise of 5.5% for 2025/26, nearly double the inflation rate, and could almost be the solution to the unions’ perennial demands in recent times. The resolution was finally approved after lengthy negotiations and while there had been earlier periods of dispute, the strikes were halted long enough for a slight respite to be had by the country as the economy was just gearing up for a post-pandemic rebirth. Henceforth, the increase was used to affirm government support for workforce stabilization in the public sector.
Details of the Pay Raise
The increase will now be a salary increase ranging from level 1 to 12, including those in terms of OSDs, and is fully pensionable, so contribution goes towards retirement benefits to ensure a safety-net for lower- and mid-level workers such as teachers, nurses, and administrative staff. Further changes for SMS in levels 13 to 16 and those falling under special statutes like the South African Police Services Act will follow later.
Timeline and Implementation
Since the 1st of April, 2025, is to serve as the first day of the new financial year, all departments are expected to implement the increase with immediate effect. However, a DPSA Circular 7 of 2025 will be issued to provide application guidance. Back pay shall be issued from April onwards in subsequent payroll runs, to avoid continuous delays in payment. The National Treasury allotted R23.4 billion for the three-year period for purposes of meeting these increases-smallest portions of which will account for the entire year 2025. Provincial and National departments need to audit payrolls again to ensure elimination of discrepancies, mostly because of OSD-related categories.
There Is An Option for a Multi-Year Agreement
This iteration of the landmark three-year wage agreement for years 2025/26-2027/28 was endorsed with an 84.34% vote by PSCBC members. For most part, increases for 2026/27 and 2027/28 will then be based on the projected CPI as prepared by the National Treasury in its Budget and will therefore range between 4.5% and 5.5% on a yearly basis, depending on inflationary trends. Such a link is meant to avoid undue pressure on the fiscus while ensuring predictability on the employee’s side. The agreement further affects non-wage benefits such as an increase in the danger allowance for workers on the frontline, though the finer details are still under negotiation.
Pumping Money Into Public Servants and The Economy
Given rise of inflation in the price of food and fuel, the increases have surely brought some cheer to the morale of public servants who are sorely under-funded in sectors like health and education. However, the pundits say it cannot meet the demands for correcting the deficits in skills or in attracting them, forecasting a 5.7% increment in private sectors; economic-wise, however, the addition of approximately R23.4 billion may just see a spillover into retail and consumption, with fiscal hawks getting ready to argue on debt servicing costs.
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