JOHANNESBURG Aug 31 (Reuters) - South Africa's government has made a new wage offer to striking state workers to end a labour dispute that has raised investor concerns over Africa's largest economy.
The strike added to tensions between President Jacob Zuma's ruling African National Congress and the country's largest labour federation COSATU, which has a long-standing governing alliance with Africa's oldest political party.
The following are some implications of how the new wage offer will impact the strike and what a settlement would mean for Zuma's government:
POLITICAL PRESSURES
Zuma will be given a measure of credit in the short term for acting quickly after he returned last week from a trip to China and then ordered his ministers to try to negotiate a settlement.
If the offer leads to a settlement, unions will likely cool rhetoric about the alliance being on the verge of rupture. But they will still keep up pressure on Zuma to push their agenda of left-leaning policies that include a call to weaken the rand.
Zuma's enemies in the ANC will still be gunning for him at a major policy setting meeting later in September and will blame him for letting the strike last as long as it did.
Zuma, seeking allies, may reach out to anti-union factions at the ANC meeting. Cosatu has called for major revisions to a government programme to expand economic empowerment to the black majority, saying it has benefitted the politically connected, while leading to cronyism and corruption. Analysts said there are groups in the ANC who would like to crack down on the unions to try to free up a rigid labour market seen as worrying investors. But there are some who joined the anti-union group out of their own self-interest to keep their slice of the empowerment programmes, analysts said.
REJECTED OFFER
If the unions reject the offer, Zuma could face one of the biggest crises of his term with a massive strike looming, more threats to the alliance and his foes looking to seize as much power from him as possible. That could leave him far weaker with most of his five-year term still ahead.
The government could try to impose its wage offer unilaterally to end the impasse, but this would further strain ties with labour. It could also quickly improve its wage offer to limit the damage.
Zuma and the ANC would find themselves in a weaker position heading into local elections early next year that would embolden the opposition. But its virtual one-party rule would not be in jeopardy.
BUDGET PRESSURES
If accepted, the government's latest proposal will likely swell state spending by an amount equal to about 1 to 2 percent of the overall budget. That will force the government to find new funds just as it tries to bring down a deficit totalling 6.7 percent of gross domestic product.
There are worries that the deal could lead to higher taxes or cause South Africa to increase its borrowing, making it more costly to obtain loans and leading to increased budget spending to pay for servicing the debt.
This could lead to a downgrade of its sovereign rating.
PUBLIC OPINION
The public appears to be angry at the unions for cutting off services and their violent conduct during a strike which has led to the sick being denied treatment at hospitals. It is also angry at the government for letting the situation get out of hand. But their anger will not likely lead to any changes in how labour disputes are fought and settled.
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