UPDATE1-S.African state workers may return to work -unions

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Monday September 06, 2010 12:09:13 PM GMT

* Strikers may soon return to work

* Unions will continue to discuss offer

(Adds more details, other strikes, analyst comments)

By Peroshni Govender

JOHANNESBURG, Sept 6 (Reuters) - South African public sector workers, on strike for nearly a month, may soon return to work but continue talks on whether to accept an increased government wage offer, union officials said on Monday.

The strike is now in its fourth week and has seen 1.3 million workers in key sectors including education, healthcare and the judiciary walk off the job demanding a double inflation 8.6 percent pay rise and a 1,000 rand ($135) a month housing allowance.

"I do believe that they are calling off the strike. Some unions have asked their members to go back to work while they are considering the offer, said Sizwe Pamla, spokesman for NEHAWU -- a union affiliated to labour federation COSATU.

Another union official said other unions needed to be convinced that workers should return to work.

"The strike must end, we want workers to return to their posts but consultations to continue. We will need to convince other unions," the official, who declined to be named, said.

Union bosses were scheduled to meet each other and then government negotiators on Monday and an announcement on whether to suspend the strike action is expected later in the day.

The decision was supposed to have been made public on Sunday but some big unions had not yet received mandates from members on how to proceed.

STATE CANNOT AFFORD OFFER

President Jacob Zuma's government raised its offer to 7.5 percent and 800 rand for the housing allowance last week but workers rejected the deal and unions asked for more time to explain the offer to their members.#

Government officials said the state cannot afford the offer they have already put on the table and there is no more room in the budget to increase its 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, but market players said the strike would cap gains by the rand and could have a bigger impact if it drags on. Economists predict that the labour action is costing the economy about 1 billion rand a day.

South Africa's rigid labour laws, which are liked by unions, make it less competitive compared to other emerging economies like Brazil, Russia, China and India and less lucrative to foreign investors.

Unions who were instrumental in Zuma's rise to power are increasingly 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 how Zuma resolves this impasse will in part determine his political future.

"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 benefitting 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.

"The question is whether he has the political resolve to read COSATU the riot act and rein in their excesses when he knows he may not survive that," Silke said.

Africa's most powerful economy has been hit by a series of strikes in the public and private sectors in recent months and two other labour stoppages are currently underway.

About 70,000 workers at petrol stations, garages and auto dealerships walked off the job last Wednesday, seeking 20 percent wage increases.

The National Union of Mineworkers (NUM) said that more than 8,000 workers seeking 15 percent pay increases at Northam Platinum began a work stoppage on Monday in the world's largest producer of platinum. Workers at one of the country's smaller platinum mines rejected the company's 8 percent wage offer. (Reporting by Peroshni Govender; Editing by Marius Bosch and Giles Elgood)

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