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Aug. 5 (Bloomberg) -- South African state workers rejected an increased wage offer and vowed to strike on Aug. 10 unless it was improved.

“We reject the offer,” Mugwena Maluleke, a spokesman for the Congress of South African Trade Unions, said in a phone interview from Johannesburg. “On Tuesday we will withdraw our labor. Further action will be announced then.” Pay talks with the government will continue today, he said.

The government announced today that it had raised its pay offer to 1.3 million state employees in a bid to avert the strike that threatens to close schools and hospitals.

The offer of a 7 percent increase in base pay, backdated to July 1, compared with a previous offer of 6.5 percent. A government pledge to lift housing allowances to 630 rand ($87) from 500 rand was left unchanged. Adjustments to salary bands meant most workers would on average receive 9 percent increases, Public Service and Administration Minister Richard Baloyi said.

Unions are demanding an 8.6 percent pay increase and monthly housing allowances of 1,000 rand, backdated to April 1. The Public Servants Association staged a two-day strike last week in support of its pay demands and threatened to resume the action on Aug. 10 unless the government met its demands.

“We have to put this matter behind us,” Baloyi told reporters in Pretoria today. “The unions and our negotiators are busy engaging. I would be jumping the gun if I reported they had agreed.”

Troop Deployment

A four-week strike in June 2007 shut most schools and disrupted services at some hospitals, clinics and immigration offices, and led the government to deploy troops to quell violent protests.

The government wants to negotiate multiyear wage agreements to avoid repeated confrontation with unions, Baloyi said.

In May, state transport company Transnet Ltd. gave its workers an 11 percent wage increase to end an 18-day strike that crippled exports, while state-owned power utility Eskom Holdings Ltd. last month agreed to a 9 percent raise to avert labor action.

Inflation slowed for a sixth consecutive month to 4.2 percent in June, and the central bank expects it to remain within its 3 percent to 6 percent target until the end of 2012.

Granting workers increases in excess of inflation was “not sustainable” and would force the government to divert money from other priorities, Baloyi said.

The government has seen its wage bill double to 259 billion rand over the past five fiscal years.

To contact the reporters on this story: Mike Cohen in Cape Town at; Franz Wild in Johannesburg at

To contact the editor responsible for this story: Peter Hirschberg at

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