Wage negotiations dispute still unresolved

PRETORIA, Wednesday 27 March 2019 – Over the past weekend, SARS had confirmed that it had reached a deadlock in negotiations with the recognised trade unions, PSA and NEHAWU, over salary increases and improvements in conditions of service and benefits for bargaining unit employees.

This deadlock came after months of negotiations which commenced in November 2018.

Organised Labour had referred a dispute to the CCMA in February 2019 but despite the dispute, parties continued with negotiations in an attempt to resolve the impasse.

Of the 26 initial demands tabled by Organised Labour, parties through their negotiations had managed to reach some form of consensus on most, with only 4 key matters remaining in dispute.

SARS acknowledged the CCMA certificate of non-resolution issued on 19th March 2019, together with the Rules for Picketing and that both PSA and NEHAWU had provided SARS with an official notice of their intention to commence industrial action tomorrow, Thursday the 28th March 2019.

The deadlock reached at the CCMA was with SARS offering a 7% increase which amounts to CPI plus 2.9% based on the published February inflation rate of 4.1%. SARS considered this offer reasonable and fair considering that it is far above increases of public institutions and most other industries.

SARS can only negotiate within its financial affordability which is influenced by amongst other factors the economic growth, resultant revenue collection and its reduced financial grant allocation from the National Treasury.

The details of the SARS financial position for financial year 2019/20, down to general ledger level have not only been disclosed to Organised Labour in a special joint financials task team, but Organised Labour were also given opportunity to make input into the budget considerations for the next three years including areas where cost containment can be further exercised.

SARS already had to put budgetary cuts and cost containment in place with regards to travelling expenditure and no provisioning has been made for payment of bonuses and external bursaries due to current budget deficits.

SARS has explained to Organised Labour that it has a bigger responsibility than only considering the current salary increases. It needs to also consider the organisation’s financial wellbeing for the next three years, especially considering the weak economic conditions and SARS’ current and projected budgetary deficits.

One will therefore understand that any increase that is above affordability will have a ripple effect on SARS capacity and ability to continue functioning optimally in the years to come.

SARS is a crucial and critical institution for this country whose work touches each and every South African. Taxes left uncollected have a dire impact on the country’s ability to render critical services where the bulk of taxes collected go towards education, health services, social protection and other public services. SARS and its employees take pride in the role that SARS plays in our democratic dispensation.

SARS, being committed to ensuring that all efforts are deployed to resolve the impasse and to avoid any adverse impact to the country’s revenue which SARS delivers to the fiscus, met with Organised Labour on Monday, 25 March 2019 until late evening.

At this session, SARS tabled a differentiated salary increase model for employees in the bargaining unit that finds its basis in principles of addressing salary anomalies, and reducing the ever-widening salary gaps caused by across-the-board increases. This model could see top performing SARS employees who are paid at the lower-end receiving increases up to 9.2% (CPI plus 5.1%). In this model, no employee would receive an increase of less than 5.2% (CPI plus 1.1%).

This proposal was unfortunately still rejected by Organised Labour and they insisted on an across-the-board increase of 11.4%.

Engagements continued yesterday, Tuesday 26 March 2019 until late at senior leadership level between SARS and the unions’ leaders. Engagements centred on the CCMA Mediator’s proposal of 8 March 2019 of an 8% increase as a possible settlement to the dispute. The CCMA Mediator’s proposal involved the following:

SARS, considering all its financial constraints tabled an offer to settle of 8%, conditional to it being a multi-term agreement for implementation on 1 April 2019. This offer to settle included agreement on an 8% increase in year 1 aligned to the CCMA proposal, with CPI plus 1% increases for year 2 and 3 of the Agreement.

In addition as a way of showing commitment, the settlement offer also included SARS acceding to pre-natal leave, long service awards increase and the status quo on other leave demands. The Family Responsibility leave demand would then be deliberated at a task team level together with other matters which were referred to the task team.

The only remaining point of difference between SARS and Organised Labour was the term of agreement.

Whist Organised Labour was not inclined to a multi-term agreement, SARS explained that for it to have reprioritised its expenditure for an 8% increase, a multi-term agreement was essential to create a level of financial certainty for the organisation based on the fiscal framework of the Medium-Term Expenditure Framework (MTEF), as well as the time needed to close on the savings that the organisation will need to make to afford the 8% increase.

Furthermore a multi-term agreement would provide for stable employer/employee relations over the period which would be conducive for SARS to focus on key improvements to take the organisation forward.

Organised Labour unfortunately rejected SARS’ settlement offer without offering an alternative viable counter-proposal.

Since this was a settlement offer, the rejection by Organised Labour of a multi term agreement, left SARS with no option but to revert to its previous position of 7% across the board increase at single term, based on its affordability and not compromising the sustainability of the organisation’s operations over the next three years. However, if Organised Labour consulted their members and they accept the offer of 8% across the board, and CPI plus 1% in subsequent years, the dispute will be resolved.

While SARS recognises the constitutional right of workers to strike, it is equally cognisance of the state’s obligation to ensure that it has adequate resources to provide citizens with access to healthcare services, sufficient food and water, social support, housing and basic education.

It is therefore in the public interest that this dispute be resolved given due regard to SARS’ crucial role in revenue collection. SARS has therefore yesterday applied to the CCMA for an intervention in terms of Section 150A of the Labour Relations Act for the Director of CCMA to intervene in an attempt to mediate the dispute.

SARS has done everything in its power and affordability level to resolve the dispute and avert strike action. However, with Organised Labour’s rejection of SARS’ final settlement offer, SARS cannot disregard that strike action may continue on Thursday, 28 March 2019.

SARS leadership and employees alike appreciate that we are at a critical juncture in our revenue collection drive and want to assure the South African public that our systems and processes are in place with several committed SARS employees available to serve taxpayer needs.

SARS has proactively put necessary contingency measures in place and have since activated those plans to endeavour having minimal disruption to taxpayer services across SARS branches and ports of entries in the event PSA and NEHAWU proceed with their industrial action.

SARS appeals to the public’s understanding as some delays could be expected and recommend that taxpayers utilise on-line services where possible while SARS is hopeful that the CCMA intervention will assist in settling the dispute.

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