Process to exempt struggling metros from wage increases ‘now less onerous’

A revamped exemption clause in the municipal salary and wage agreement reached last week will make it less onerous for the 157 financially distressed municipalities to get an exemption if they cannot afford to pay their staff the increases set for each year until 2029.

This is according to Zwe Ndlala, senior manager for collective bargaining and labour relations at employer body Salga, which represents all 257 municipalities.

This is after only one of the 18 applications received since 2020 was approved. 

Most notable was the City of Tshwane’s application for 2023/24, which was dismissed. The city nevertheless failed to implement the wage agreement, which led to a violent, unprotected three-month-long strike.

The metro, under the leadership of Mayor Cilliers Brink, refused to budge and has been fighting for exemption ever since, arguing the increase was unaffordable for the cash-strapped city. The matter is now in the Labour Court and has been set down for hearing in November. 

Johan Koen, general secretary of municipal union Imatu, warns that such exemptions may undermine the collective agreement.

ALSO READ: Salga’s wage deal: To pay municipal workers more or to fix collapsing areas?

Wage agreement

Salga and municipal unions Samwu and Imatu reached a salary and wage agreement last week after the previous collective agreement lapsed in June. 

The five-year duration of the agreement is a first for the wider public sector and aims to ensure stability in the sector. 

Municipal staff will receive 4.6% more, backdated to 1 July and 1.5% extra per month from 1 March 2025. In total, this will be almost 6% more for the financial year. 

An increase of CPI plus 0.75% will apply from the start of the next financial year, 1 July 2025, and the same for the next financial year, starting from 1 July 2026.

The increase in each of the next two financial years will be CPI plus 1.25%.

The previous wage agreement signed in 2021 provided for increases of 3.5% (2021/22), 4.9% (2022/23), and 5.4% (2023/24).

Salga says that this time around, the parties considered the challenging economic environment, which was characterised by high inflation and constrained fiscal resources. 

“Salga was mandated by municipalities to negotiate a balanced salary and wage agreement that reflects current economic pressures, particularly in light of several municipalities facing financial distress.”

ALSO READ: Salga says majority of municipalities can’t afford to pay workers

Mediation

It proposed that these municipalities be allowed to submit applications to pay the increases when their finances have improved substantially and be required to provide financial recovery plans to ensure they do take steps to improve their finances.

The unions were, however, vehemently opposed to any changes that may undermine the collective agreement. 

Eventually, the parties settled on including mediation in the exemption process, tightening the timeframes for exemption applications, and providing clear criteria for evaluating them.

In addition, the role of the financial expert who will assist the arbitrator should the matter not be settled through mediation has been strengthened.

Among other things, the financial expert will be required to provide a written report on their findings regarding the municipality’s ability to afford the increases. Such a report will be available should the arbitrator’s ruling be taken on review by the Labour Court. 

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Timelines

The municipalities now have 45 days from 6 September, when the agreement was signed, to apply for the exemption.

From the second year of the agreement, they will have 30 days from the date their budget is approved by the council – usually in May. 

To apply outside of these timelines, they will first have to get condonation. 

The criteria to be considered for granting exemption are:

• The employer cannot afford the implementation of the agreement in whole or in part;
• Meeting legal criteria for a municipality with serious financial problems;
• Fairness to the employer and employees;
• Short-term cash flow problems at the municipality that necessitate partial exemption;
• Unexpected economic hardship during the term of the agreement and job creation or job losses;
• Whether the municipality budgeted for the increase, considering unfunded budgets and unforeseen budget constraints;
• The ruling should not undermine the collective agreement; and 
• Any other relevant factor. 

This article was republished from Moneyweb. Read the original here.