S.African unions agree to public sector wage deal, says minister

CAPE TOWN, July 27 (Reuters) - The majority of public sector unions in South Africa have signed a one-year wage hike deal, a cabinet minister said on Tuesday, as government looks to cut a huge spending bill and boost economic prospects worsened by the COVID-19 pandemic.

When talks started in March, public sector unions representing more than 1 million teachers, police and nurses, wanted a salary hike of consumer inflation plus 4% for all workers in the 2021/22 fiscal year.

Government offered zero increase at the outset, but changed tack during a conciliation process after parties deadlocked and labour threatened strike action.

In July, Public Service and Administration Minister Senzo Mchunu offered civil servants a 1.5% salary increase plus a cash payment, which the majority of unions, including the South African Democratic Teachers Union and the Public Servants Association, accepted on Monday.

"Thank you for your leadership, thank you for negotiating with the interests of public servants and the citizens at heart," Mchunu said in a statement welcoming the deal.

The government is trying to contain its wage bill, which accounts for about a third of consolidated spending and which has risen quickly in the past decade.

The huge wage bill has been flagged among major concerns for credit-rating agencies that already rate the sovereign as "junk". (Reporting by Wendell Roelf; Editing by Edmund Blair)