By Peroshni Govender and Jon Herskovitz
JOHANNESBURG, Aug 26 (Reuters) - South Africa's top labour federation COSATU threatened on Thursday to sever its long-standing alliance with the ruling African National Congress and widen a state workers' strike next week to key industries.
Thousands of striking state workers held marches in major cities nationwide calling on the government to meet their wage demands. About 1.3 million unionised employees have walked out in the standoff, shutting schools and cutting off medical treatment at hospitals.
'The alliance is again dysfunctional,' COSATU Secretary-General Zwelinzima Vavi said in a statement. 'The centre cannot hold.'
The comments were one of the strongest signals to date that organised labour, which helped President Jacob Zuma ascend to the presidency, may be ready to cut, or change, a relationship with the ANC that was forged in their struggle to end apartheid.
The state workers' strike has had no major impact on rand and bond trading but market players said worries would mount if it extended into September and other labour groups joined in.
Jasson Urbach, an economist with the Free Market Foundation, estimated the work stoppage was costing the economy 1.084 billion rand ($147.8 million) a day.
COSATU said it filed 7-day strike notices on Thursday so that all its 2 million members could join the state workers in a strike they said would also target the mining and manufacturing sectors, a step which could grind the country to a halt.
Some analysts believe South Africa could ultimately benefit from a split between the ANC and COSATU because it would allow the government to ditch union-friendly policies and reform a rigid labour market, criticised for restricting investment and driving up production costs.
But not all are convinced that the long-time partners will abandon each other, despite growing acrimony.
'The reality of each of these factions is that it is very difficult for them to break with their ally, however tenuous that relationship is,' said Mark Schroeder, a specialist on Africa for global intelligence company Stratfor.
NOT AFFORDABLE
On top of the wage dispute, the leader of the ANC's Youth League Julius Malema fired what amounted to a warning shot at Zuma on Wednesday, questioning his leadership and implying the ruling party's youth wing would not support Zuma for a re-election bid.
COSATU also wants the government to reverse a 9-billion-rand deal involving mining giant ArcelorMittal that transfers 26 percent of its local shares to employees and black investors including a consortium led by Zuma's son, Duduzane.
'We are heading rapidly in the direction of a full blown predator state, in which a powerful, corrupt and demagogic elite of political hyenas increasingly controls the state,' Vavi said, as he took a swipe at Zuma over the heavily criticised deal.
The government has said it cannot afford the state workers' demand of an 8.6 percent wage rise, more than double the inflation rate, and 1,000 rand ($136) a month as a housing allowance. It has offered 7 percent and 700 rand.
Any agreement to end the dispute is likely to swell state spending by about 1 to 2 percent, forcing the government to find new funds just as it tries to bring down a deficit totalling 6.7 percent of gross domestic product.
An expanded strike would add to worries about prospects for growth after the economy slowed more than expected in the second quarter of 2010 as mining contracted and manufacturing expanded at a slower pace.
In Johannesburg's Soweto township, where police have clashed with strikers trying to block the entrance to a hospital, anger was building at the government for not reaching a deal and at strikers for denying services to the poor.
'We work for the government and we live in shacks,' said one healthcare worker who only identified himself as Joseph.
(Editing by Marius Bosch and Noah Barkin) (For more Reuters Africa cover visit: http://af.reuters.com/ -- To comment on this story email:SouthAfrica.Newsroom@reuters.com) ($1=7.355 Rand) Keywords: SAFRICA STRIKE/ (jon.herskovitz@thomsonreuters.com; +27 11 775 3142; Reuters Messaging: jon.herskovitz.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
JOHANNESBURG, Aug 26 (Reuters) - South Africa's top labour federation COSATU threatened on Thursday to sever its long-standing alliance with the ruling African National Congress and widen a state workers' strike next week to key industries.
Thousands of striking state workers held marches in major cities nationwide calling on the government to meet their wage demands. About 1.3 million unionised employees have walked out in the standoff, shutting schools and cutting off medical treatment at hospitals.
'The alliance is again dysfunctional,' COSATU Secretary-General Zwelinzima Vavi said in a statement. 'The centre cannot hold.'
The comments were one of the strongest signals to date that organised labour, which helped President Jacob Zuma ascend to the presidency, may be ready to cut, or change, a relationship with the ANC that was forged in their struggle to end apartheid.
The state workers' strike has had no major impact on rand and bond trading but market players said worries would mount if it extended into September and other labour groups joined in.
Jasson Urbach, an economist with the Free Market Foundation, estimated the work stoppage was costing the economy 1.084 billion rand ($147.8 million) a day.
COSATU said it filed 7-day strike notices on Thursday so that all its 2 million members could join the state workers in a strike they said would also target the mining and manufacturing sectors, a step which could grind the country to a halt.
Some analysts believe South Africa could ultimately benefit from a split between the ANC and COSATU because it would allow the government to ditch union-friendly policies and reform a rigid labour market, criticised for restricting investment and driving up production costs.
But not all are convinced that the long-time partners will abandon each other, despite growing acrimony.
'The reality of each of these factions is that it is very difficult for them to break with their ally, however tenuous that relationship is,' said Mark Schroeder, a specialist on Africa for global intelligence company Stratfor.
NOT AFFORDABLE
On top of the wage dispute, the leader of the ANC's Youth League Julius Malema fired what amounted to a warning shot at Zuma on Wednesday, questioning his leadership and implying the ruling party's youth wing would not support Zuma for a re-election bid.
COSATU also wants the government to reverse a 9-billion-rand deal involving mining giant ArcelorMittal that transfers 26 percent of its local shares to employees and black investors including a consortium led by Zuma's son, Duduzane.
'We are heading rapidly in the direction of a full blown predator state, in which a powerful, corrupt and demagogic elite of political hyenas increasingly controls the state,' Vavi said, as he took a swipe at Zuma over the heavily criticised deal.
The government has said it cannot afford the state workers' demand of an 8.6 percent wage rise, more than double the inflation rate, and 1,000 rand ($136) a month as a housing allowance. It has offered 7 percent and 700 rand.
Any agreement to end the dispute is likely to swell state spending by about 1 to 2 percent, forcing the government to find new funds just as it tries to bring down a deficit totalling 6.7 percent of gross domestic product.
An expanded strike would add to worries about prospects for growth after the economy slowed more than expected in the second quarter of 2010 as mining contracted and manufacturing expanded at a slower pace.
In Johannesburg's Soweto township, where police have clashed with strikers trying to block the entrance to a hospital, anger was building at the government for not reaching a deal and at strikers for denying services to the poor.
'We work for the government and we live in shacks,' said one healthcare worker who only identified himself as Joseph.
(Editing by Marius Bosch and Noah Barkin) (For more Reuters Africa cover visit: http://af.reuters.com/ -- To comment on this story email:SouthAfrica.Newsroom@reuters.com) ($1=7.355 Rand) Keywords: SAFRICA STRIKE/ (jon.herskovitz@thomsonreuters.com; +27 11 775 3142; Reuters Messaging: jon.herskovitz.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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