JOHANNESBURG (Reuters) - South Africa's Labour Appeal Court reserved judgment on Wednesday on a public sector wage dispute that has big implications for government efforts to arrest soaring debt.
The dispute centres on whether the government should pay civil servants salary increases that were due to come into force in April 2020 as part of a three-year deal struck in 2018.
The government kept wages flat in April, saying it could not afford the increases due to the COVID-19 pandemic.
The court's judges did not say when they would hand down their judgment.
Civil servants' salaries make up around a third of consolidated state spending, having risen by 40% in real terms over the past decade.
But public sector trade unions consider the 2018 deal a binding agreement and say the government cannot walk away from it after honouring the first two years.
The government argues the wage deal was invalid because it did not comply with a mandatory requirement for fiscal affordability. It says the April salary increases would cost more than 37 billion rand ($2.4 billion) at a time that public resources are hugely stretched.
The credibility of the government's fiscal consolidation plans could be damaged if the court sides with the unions.
The governing African National Congress party is in an alliance with some of the unions involved in the dispute, meaning it has to tread carefully.
Unions have threatened protests.
This week, the government wrote to the unions asking to delay Wednesday's court hearing until after Feb. 1 to negotiate an out-of-court settlement, but unions rebuffed the request.
($1 = 15.3682 rand)
(Reporting by Alexander Winning and Wendell Roelf; Editing by Mfuneko Toyana and Andrew Cawthorne)