Government says its current 5.9% offer in the wage negotiations is fair and reasonable, and takes into account the current economic situation of the country.

According to government – as the employer – the current offer sufficiently cushions the salaries of public service employees from the effects of inflation.

It says the offer is estimated at R37-billion. This offer is inclusive of the Cost of Living Adjustment (COLA) plus other benefits for 2015/16 financial year.

The current wage bill is R400-billion and is projected to grow to R430-billion in the 2015/16 financial year. This constitutes about 35.5% of the total government budget.

“Any increase beyond what is budgeted will lead to borrowing for recurring expenses such as salaries and impact negatively on operational budgets of departments, infrastructure development, employment creation and service delivery,” the Department of Public Service and Administration said on Thursday.

Government is currently locked in wage negotiations with public sector trade unions and the two parties have failed to reach an agreement. They have taken their dispute to arbitration. Some unions also plan to embark on a protest to National Treasury offices in Pretoria next Thursday to demand better wages.

However, the parties have agreed on certain terms such as the GEMS medical aid subsidy, which will be improved from 17.6% to 28.5% for public service employees. The parties have also agreed to review the efficacy and assess the operating model of GEMS.

The parties have however not reached an agreement on COLA.

The employer has offered a projected CPI + 1% for 2015/16; projected CPI + 0.5% for 2016/17 and projected CPI + 0.5% for 2017/18.

The State, as employer, says it remains optimistic that the conciliation process will produce a mutually beneficial outcome and that the negotiations will conclude this month.