UPDATE 2-S.Africa police fire rubber bullets at strikers

* Police use force to break up protests

* Finance minister sees no major economic hit

* Pressure mounts to reach a deal
(Adds analysts quotes, car workers’ strike)

By Jon Herskovitz

JOHANNESBURG, Aug 19 (BestGrowthStock) – South African police fired
rubber bullets to disperse crowds blocking roads and healthcare
workers prevented patients from entering hospitals as a strike
by more than 1 million civil servants grew on Thursday.

The strike for higher wages that started a day earlier has
slowed the treatment of the sick and shut schools across the
Africa’s largest economy, worrying investors and adding pressure
on the government to reach a deal.

The finance minister said he did not see a protracted strike
as having a major economic impact. But analysts have said the
labour action that also includes customs workers, police and
clerks could slow commerce and trade. [ID:nWEA4860]

Crowds in Soweto blocked a main road near a hospital running
through the densely populated area, bringing traffic to a halt
and preventing patients from entering.

“When they refused to move, minimum force had to be used. So
rubber bullets were fired,” police spokeswoman Captain Nondumiso
Mpantsha said. Water cannon were also deployed and there were
no major injuries, she said.

The unions staged a one-day warning strike last week and
said the action that began on Wednesday was the start of an
indefinite strike aimed at grinding the government to a halt.

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For graphics on days lost to strikes in South Africa and

wage demands in recent strikes, click on

http://graphics.thomsonreuters.com/F/08/ZA_STRK0810.gif

http://graphics.thomsonreuters.com/F/08/ZA_WAGES10810.gif

For a factbox on how South African strikes have been
settled, click on [ID:nLDE67H0BP]

For Scenarios on what is next in the public sector strike,
click on [ID:nLDE67B0Q7]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Analysts expect a deal to be reached in the next few days at
the earliest or by the start of September at the latest, with
any agreement certain to swell state spending as the government
tries to bring its deficit down from 6.7 percent of gross
domestic product.

“We’re not seeing the impact in day to day figures, but
certainly it would have an effect on sentiment,” said Nema
Ramkhelawan, a currency analyst at Rand Merchant Bank.

MONEY PROBLEMS

Unions are demanding an 8.6 percent pay rise, more than
double the inflation rate, and 1,000 rand ($137) a month for
housing.

Last week the government offered to the housing allowance to
700 rand from a previous offer of 630 rand, but refused to
increase its wage rise offer of 7 percent. [ID:nLDE67C0Z4]

The housing allowance alone would be equal to about 1
percent of all budget spending and the government has said it
does not have the money to pay more.

“We had to make a choice between increasing the salary bill
to unaffordable levels by meeting the union demands and cutting
other urgently needed services,” the cabinet said in a
statement.

Adding to the mix was a threat to expand in the coming days
a strike of auto factory workers, who are seeking a 15 percent
wage hike, to the car components sector. The autoworkers’ strike
that began last week has slowed production in one of the
country’s most important industries. [ID:nWEA4853]

The state workers’ strike increases pressure on President
Jacob Zuma’s ruling African National Congress to reach a deal
with organised labour and appease the party’s longstanding union
allies who also have been a reliable source of votes.

But pressure will also mount on unions as rank and file
members lose pay from being off the job and some look favourably
on the government’s offer.

Public opinion could turn against the unions if a prolonged
work stoppage forces parents to find day care for their
children, delays treatment at hospitals and slows paperwork at
government agencies.

A mid-range civil servant already makes about 40 percent
more than the average worker, who earns 6,383 rand a month in
salary and benefits, but bottom grade civil servants make about
40 percent less than the average.

Those feeling the pinch the greatest from the strike are the
poor who are most dependent on government services.

“There is no appeal to the public,” said Sakhela Buhlungu,
an expert on organised labour at the University of Johannesburg.

He said the unions risks alienating the public unless they
can change their message and tactics.
(Additional reporting by Xola Potelwa and Spokes Mashiyane;
Editing by Giles Elgood)

UPDATE 2-S.Africa police fire rubber bullets at strikers