Pretoria - Public sector workers will return to their posts on Tuesday after striking for just over three weeks, a union official said.
The strike by 1.3 million workers hit schools, state hospitals and the judiciary. Strikers have demanded a double inflation 8.6% pay rise and a R1 000 a month housing allowance.
"Labour has decided to suspend the strike and this does not mean we have accepted the state offer," nineteen unions representing the state workers said in a joint statement.
The unions said they had 21 days to finalise discussions with their members on a draft agreement.
The South African government had no immediate comment. Public Service and Administration Minister
Richard Baloyi will issue a statement later on Monday, his spokesperson Dumisani Nkwamba said.
Workers were expected to return to work on Tuesday.
"We suspended the strike immediately, we expect workers to go back to work immediately and that means tomorrow," said Chris Klopper of the Independent Labour Caucus.
Analysts said the suspension of the strike was positive but the labour action highlighted tensions between the powerful Cosatu labour federation, which is in an alliance with the ruling African National Congress and the South African Communist Party.
"It is certainly positive but there is continuous strain among the alliance partners. The important thing here is that people are going back to work because the damage to the economy has been quite severe," said Noelani King Conradie, economist at NKC Independent Economists.
President
Jacob Zuma's government raised its offer to 7.5% and R800 for the housing allowance last week but workers rejected the deal and unions asked for more time to explain the offer to their members.
'Cannot afford more'Government officials said the state could not afford the offer they had already put on the table and there was no more room in the budget to increase the offer, which would swell state spending by about 1 percent.
The biggest strike since 2007 in terms of lost man days has left bonds, stocks and the rand largely unaffected.
Economists said the labour action has cost the economy about R1bn a day.
South Africa's rigid labour laws, which are liked by unions, make it less competitive than other emerging economies such as Brazil, Russia, China and India and less lucrative to foreign investors.
Unions who were instrumental in Zuma's rise to power are disappointed that he has not done more to improve workers' conditions and adopt left-leaning economic policies and this has contributed to a widening rift between the ANC and Cosatu.
Although the government's purse is limited in how much it can offer workers, analysts said Zuma's political future will in part be determined by his handling of the dispute.
"Zuma's ability to act is compounded by his political vulnerability," said independent political analyst David Silke.
Unions are angry that members of Zuma's government have been accused of corruption and cronyism and have also called for the reversal of a multi-billion rand empowerment deal in mining benefiting his son.
With the ruling party holding its mid-term policy conference later this month, alienating the unions could jeopardise Zuma's position and risk losing support for the party in next year's local government elections.