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South African state workers reject offer, plan strike

South African state workers reject offer, plan strike

* Unions plan strike from Wednesday

* Pressure mounts on government to reach deal

By Peroshni Govender

JOHANNESBURG, Aug 17 (Reuters) – South African public sector unions on Tuesday rejected a revised government wage offer and said they planned a mass strike from Wednesday that will bring public services to a halt in Africa's largest economy.

Analysts however expect a deal to be reached before a coalition of unions, representing 1.3 million civil servants including police, customs officials, teachers and health workers, stages a prolonged stoppage that could deal a blow to commerce and trade.

"From tomorrow there will be a total shutdown and the beginning of a protracted strike and we will only stop when government responds," said Thobile Ntola, president of the SADTU teachers union, a part of the labour coalition. The strike threat by unions in the country's largest umbrella labour group COSATU increases pressure on the government to improve its terms or risk what could be the worst strike by state workers for three years.

Economists worry that whatever deal is reached will swell state spending as the government tries to bring its deficit down from 6.7 percent of gross domestic product.

Last week the government offered to increase the monthly housing allowance to 700 rand ($95) from a previous offer of 630 rand, but refused to increase its wage rise offer of 7 percent.

The housing allowance alone would be equal to about 1 percent of government spending.

The unions are demanding an 8.6 percent pay rise, more than double the inflation rate, and 1,000 rand for housing. (Writing by Jon Herskovitz; editing by Giles Elgood)

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Carla GoldsteinSouth African state workers reject offer, plan strike