Fin24 reports that economists believe that the recent local government wage deal between unions and the SA Local Government Association (Salga) at the SA Local Bargaining Council was an encouraging indication that government could come to grips with spending in the coming years.

Local government employees will receive a 3.5% increase with effect from 1 July 2021, along with once-off, non-pensionable cash allowances. Those earning R12,500 or less at 1 July will receive a once-off amount of R4,000 and those earning more will get R3,000. Remarking on the successful conclusion of the wage talks, Salga said the deal represented a compromise for all the parties while on the other hand, it gave SA’s 257 municipalities that were in financial distress a lifeline and breathing space until 2023. Old Mutual investment strategist Izak Odendaal said unions could have secured higher wages, but it appeared that the dire financial state of municipalities was the ultimate determining factor. "It's interesting because the local government elections are around the corner. You would think the unions would have had a nice bargaining chip. The reality is that many municipalities are in poor financial shape, especially with lockdown,” said Odendaal. Alluding to commitments made by President Cyril Ramaphosa and former finance minister Tito Mboweni to get spending in check, Efficient Group economist Francois Stofberg said the latest local government wage bill was "a sign that difficult decisions are being made at an increasing rate" He went on to point out: "For potential economic performance, it means a lot. This is another definite step in the right direction. The way in which government finances have fared in the past decade have not been conducive to economic growth."

• Read the full original of the report in the above regard by Khulekani Magubane at Fin24 (subscriber access only)

Get other news reports at the SA Labour News home page