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Teachers, Nurses in South Africa Start Indefinite Strike Over Pay Dispute

South African public-service unions, representing 1.3 million teachers, nurses and other state workers, began an indefinite strike after rejecting what the government said was its final offer of a pay increase.

About 90 percent of workers are expected to support the walkout, disrupting services at hospitals, schools and immigration offices, said Mugwena Maluleke, who is leading the wage talks for the Congress of South African Trade Unions, the country’s biggest labor grouping.

“The government can’t afford not to resolve this strike,” Maluleke said in a phone interview from Johannesburg today. “Our wage demands are reasonable. It’s urgent that they resolve this and not allow a protracted strike where the public won’t be getting services.”

State employees are seeking an 8.6 percent pay increase and monthly housing allowances of 1,000 rand ($137) backdated to April 1. The government’s latest offer, made Aug. 12, is for an increase of 7 percent and 700-rand housing allowances backdated to July 1. South African inflation was 4.2 percent in June.

South Africa’s public-sector wage bill has almost doubled over the past five years and the government says it must curb spending on salaries if it is to improve access to education, health and other services.

Over Budget

The February budget set aside 21.6 billion rand for wages in the year through March 2011, including a provision for 5.2 percent increases. The latest wage offer already exceeds that allocation by about 5 billion rand, Public Service Administration Minister Richard Baloyi told reporters in Cape Town today.

“Our capacity to afford is actually exhausted,” Baloyi said. “We have not emptied the envelope, we have broken it. We can’t keep negotiating, keep on saying let’s talk, let’s talk, let’s talk, as if there is money in the back pocket.”

The government plans to give the unions 21 days to accept the offer from tomorrow. If they fail to do so, the increases will be imposed unilaterally.

Government employees last went on strike in 2007, when schools, hospitals and immigration offices were disrupted for 29 days, the longest-ever walkout by state workers.

‘Impact on Unemployment’

“The economy is still very flat and to be talking about wage increases of this magnitude, you can’t ignore the impact on unemployment,” Dennis Dykes, chief economist of Nedbank Group Ltd., said in a phone interview from Johannesburg today. “We’ve seen very significant wage increases in the past few years, while also a deterioration of government revenues.”

South Africa’s unemployment rate of 25.3 percent is the highest of 62 countries tracked by Bloomberg.

A higher wage bill may undermine the government’s plans to cut the budget deficit to 5 percent in the year through March 2012 from 6.2 percent in the current financial year. It also adds pressure on inflation, which has been inside the central bank’s target range of 3 percent to 6 percent for five months.

“Additional pressure on public-sector finances and the subsequent need to increase the taxes will have a consequential downstream impact on both business and consumers,” the South African Chamber of Commerce and Industry, the country’s biggest business organization said, in an e-mail.

The government is still assessing the impact of the strike and will announce its findings later today, Baloyi said.

The impact on schools “varies from province to province,” Bobby Soobryan, the director-general of the Department of Basic Education, told reporters in Cape Town. “It’s a great concern. This will have a huge adverse impact on our preparations” for year-end examinations.

About 38 percent of state workers are teachers.

Fidel Hadebe, spokesman for the Health Department, said contingency plans will be put in place to transfer patients to hospitals less affected by the strike.

The Home Affairs Department has also taken measures to minimize any disruption, spokesman Ronnie Mamoepa said.

The strike may gain momentum tomorrow when the 210,000- member Public Servants Association joins the labor action.

To contact the reporters on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net; Mike Cohen in Cape Town at mcohen21@bloomberg.net.

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