Govt, unions to hold urgent talks

Johannesburg - Officials and public sector unions said they would hold wage talks on Wednesday in an attempt to head off a strike by nearly 1 million civil servants that could cripple commerce in the continent's largest economy.

The government has set Wednesday as a deadline for the unions to sign a deal that offers them a 6.5% wage increase and a monthly housing allowance of R630.

Several unions have already rejected the government's offer and want a raise of 8.6%, more than double the inflation rate, and a housing allowance of R1 000.

If the talks fail, the unions could start a mass labour action this week but many have indicated they will wait until next week to down tools.

Analysts expect a deal to be reached that heads off any immediate economic damage but warned that wage raises well above inflation pose a long-term risk by increasing budget spending as the government tries to cut a deficit of 6.7% of gross domestic product.

"A resolution will be expensive for the government and we expect brinkmanship tactics from both sides," Eurasia Group Africa analyst Anne Fruhauf said in a research note last week.

The ruling ANC party, which has a long-standing alliance with organised labour, is likely to bend to union demands, analysts believe.

It does not want to see a long halt in public services, which could dent support ahead of national elections early next year for almost all local government posts.

"We have made it very clear that the offer we have made is in the public interest," said Dumisani Nkwamba, the spokesperson for the public services minister.

The government has other priorities that included building schools, roads and police stations, and any additional spending on wages would stretch sparse resources too thinly, Minister Richard Baloyi told reporters last week.

Those who have threatened to strike include customs and immigration officers, police, healthcare workers and teachers in what could be the largest public sector work stoppage since 2007, when the strike dented the economy.

"I can assure you that our union will not go on a further strike this week. If anything happens, it will only be next week," Manie de Clercq, a spokesperson for the Public Servants Association whose members downed tools last week, said.

  - Reuters