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SALGBC
In a significant milestone for the South African local government sector, a historic five-year wage agreement was signed in early September, bringing much-needed stability and certainty to workers and municipalities alike.
HISTORIC WAGE DEAL BRINGS STABILITY TO LOCAL GOVERNMENT SECTOR
The South African local government sector broke new ground at the beginning of September when it unveiled a historic five-year wage deal.
The wage agreement, signed between employer body the South African Local Government Association (SALGA) and trade unions Independent Municipal and Allied Trade Unions (IMATU) and the South African Municipal Workers Union (SAMWU) covers 270 000 workers, excluding Municipal Managers and managers that report directly to them.
The agreement gives workers an increase of 4,5% effective from July this year and an additional 1,5% from March next year. In the next two financial years, starting in the 2025/2026 financial year, increase will be CPI plus 0,25%, while for the last two years of the agreement, ending in June 2029, increases will be CPI plus 1,25%. In all instances, once CPI drops below 4%, it will be assumed to be 4% and once it goes above 7%, it will be capped at 7%.
The minimum wage payable will increase by 4,5% to R9 960,45 from July and in March next year, increase by another 1,5% to R10 109,85, Increases to medical aid contributions, currently at R5 514,86 and housing allowance, currently at R1 066,41, will be at 4,5% but will not have the additional 1,5% increase in March. In the remaining years, the increases will be in line with salaries.
The agreement also allows for investigation into improved access to housing and leaves the allocation of serviced stands to the discretion of the municipalities.
Stability and Forward Thinking
The signing of this agreement marks a major milestone in negotiations that began in mid-July 2024. According to Bill Govender, General Secretary of the South African Local Government Bargaining Council (SALGBC), the deal represents a major step forward for the sector, fostering a more predictable environment for both workers and municipalities.
“The agreement is groundbreaking and hopefully sets a new benchmark for the public sector,” Govender
remarked, highlighting that this is the first time the local government sector, or indeed the broader public sector, has entered into a five-year wage deal.
Zwe Ndlala, a Senior Manager, Collective Bargaining and Labour at SALGA and the chief negotiator, says SALGA was “intentional” about concluding a five-year deal, as they feel such a deal helps with planning and budgeting.
“For the next five years, we will not be talking money, there will not be strikes over money,” said Ndlala, pointing out a key benefit of the deal. >
The SALGBC is key institution that strives to ensure a stabilized and peaceful industrial relations in the municipal sector. The SALGBC is established voluntarily, in terms of the Labour Relations Act, by the three founding parties to the Council, viz. the South African Local Government Association (SALGA), on the one hand, and the South African Municipal Workers Union (SAMWU) and the Independent and Allied Municipal Workers Union (IMATU). SALGA is the only employer body, which represents the 257 municipalities. The two trade unions parties, SAMWU and IMATU jointly represent 97% of employees in the municipal sector.
Productivity and Service Delivery
Govender pointed out that one of the key features of this historic
agreement is the inclusion of a productivity clause, which ties wage increases to measurable improvements in municipal service delivery. He noted that, unlike industries that produce tangible goods, municipalities’ productivity is gauged through the efficiency and quality of the services they deliver to the public. The productivity clause clearly states that wage adjustments should serve to reinforce and promote optimal municipal performance, which in turn ensures a higher level of service delivery for the communities they serve.
To support this productivity goal, the agreement mandates the implementation of the Service Charter and the Professionalisation Framework for Local Government. The Service Charter is a commitment between SALGA, IMATU, and SAMWU that outlines each party’s roles and
responsibilities in driving improved performance and enhanced service delivery within local government. The agreement also holds stakeholders accountable while empowering residents and businesses to understand the level and type of services they can expect from their local municipalities.
Challenges and Municipal Exemptions
Sithole Mbanga, the CEO of SALGA, emphasised that the employer body’s main aim coming into the negotiations was “to achieve stability for the sector and make employees happy.”
“The fiscal is not to our advantage as a country, but more so to us as municipalities,” stated Mbanga, who pointed to the fact that they contemplated a scenario
where worsening conditions puts pressure on some of their 257 member municipalities and creates a challenging environment for municipalities to deliver services and remunerate workers.
Mbanga noted that the five-year agreement offers municipalities the certainty they need to plan and budget effectively for the future. For workers, the deal not only provides job security but also allows them to focus on their roles as service providers in a stable work environment.
He emphasised that despite the external pressures - such as political instability and policy challenges that municipalities face - this agreement allows workers to concentrate on delivering services to the public.
He drew attention to the fact that the agreement also includes provisions for municipalities that may struggle to meet the wage increase requirements. Municipalities facing financial difficulties will be entitled to apply for an exemption from the agreement, which will involve a mediation process. If mediation fails, an exemption hearing will be conducted by an arbitrator, who will be assisted by a financial expert.
Municipalities have 45 working days from the signing of the agreement to submit their exemption applications.
In order to qualify for an exemption, a municipality must among a range of factors, show the number of employees affected by the exemption, the reasons why the exemption is sought, the nature and size of the municipality, the duration and timeframe for which the exemption sought which is usually a
financial year, the financial recovery plan of the municipality and its record of compliance with the provisions of previous agreement. The municipality must show that trade unions or employees themselves are aware of the exemption application and provide two years financial statements.
Union Perspective and Long-Term Planning
South African household finances have been under immense pressure over the past four years, first with the onset of the Covid 19 pandemic, and then with the cost-of-living crisis caused by the Russia Ukraine conflict
which broke out in February 2022. This was a key consideration for unions, who initially had a mandate of a one year deal, going into these negotiations. Johan Koen, IMATU General Secretary said that, “This 5-year salary and wage collective agreement is the first of its kind for the local government sector. It guarantees wage increases for the next 5-years that will assist our members to cope with the rising cost of living, while at the same, ensuring labour peace and stability for the sector, during this period.”
Koen noted that the agreement was negotiated under very difficult economic circumstances, but feels the unions worked hard to ensure that we get the best deal for their members.
He reiterated IMATU’s commitment to implementing the productivity. For its part, IMATU will host a conference in October this year under the theme “Let’s get Local Government Working”. During this conference, IMATU will consider ways in which the local government sector can be professionalised.
Nelson Mokgotho, President of SAMWU stated that the union is satisfied with the outcome of the negotiations. He noted that their mandate was to secure an inflation linked increase as workers basic needs were getting more expensive.
“We understand the environment in which we operate and that some municipalities cannot afford to pay salaries” said Mokgotho, noting that jobs preservation was a key goal for them.
He pointed out that for the three-year agreement that has just expired, SALGA started with an offer for 1%, settling at 3,5%. Mokgotho contends that 6% is a decent increase
He stated that another key driver is the political environment in which municipalities operate, which has been fiercely contested and characterised by coalition government since the 2016 municipal elections, which makes for an unpredictable environment. He noted for example that following the upcoming 2026 Local Government Election, a different demand can be imposed on unions, for example, to negotiate with National Treasury rather
than the current centralised model to negotiate with SALGA. This agreement protects that framework in the short term.
A Positive Outlook
According to Duduzile Madubanya, one of two facilitators for the wage talks, the signing ceremony on September 6 was characterised by a positive and cooperative atmosphere, reflecting the constructive nature of the negotiations. This spirit of collaboration played a crucial role in reaching a successful outcome. She noted that the relationship between the parties involved had carried the negotiations forward, making it one of the most amicable negotiation processes she had facilitated in any sector for some time.
Her co-facilitator, Advocate TL Mabusela, echoed this sentiment, remarking that at no point did the facilitators need to invoke their powers as commissioners to resolve disputes, as the parties were able to find common ground on key points of the agreement.
Looking ahead, Madubanya emphasised that this five-year agreement has the dual benefit of offering stability while also protecting workers against unforeseen events, such as the COVID-19 pandemic, which had a profound impact on the sector. By guaranteeing wage increases for the next five years, the agreement provides a safety net for workers, ensuring that their earnings will not be eroded by external shocks.
For municipalities, the deal offers a framework that balances financial sustainability with the need to attract and retain skilled workers, which is critical for maintaining service delivery standards in an increasingly complex and demanding environment.
"This five-year agreement sets a new benchmark for the public sector, offering much-needed stability for both workers and municipalities." –Bill Govender, General Secretary of SALGBC
"A stable work environment allows employees to focus on service delivery, even as municipalities face external pressures like political instability and financial challenges." – Sithole Mbanga, CEO of SALGA
"Despite difficult economic conditions, this agreement secures inflation-linked wage increases and ensures labor peace over the next five years." – Johan Koen, General Secretary of IMATU
"Our mandate was to ensure inflation-linked increases, safeguarding workers against the rising cost of living while preserving jobs." – Nelson Mokgotho, President of SAMWU
