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Edition: U.S. Article Comments (0) Save Email Print Reprints Most Popular Most Shared Earl becomes major hurricane, could swipe U.S. east 1:15pm EDT UPDATE 4-Hurricane Earl strengthens, could swipe U.S. coast 4:27pm EDT Hurricane Earl strengthens, could swipe U.S. coast 4:28pm EDT Saudi couple "hammer 24 nails" into Sri Lankan maid 26 Aug 2010 Windows DLL load hijacking exploits go wild 24 Aug 2010 Woman buries brother, discovers dead son 20 Aug 2010 Stocks fall in year's lightest volume | Video 4:45pm EDT Analysis: The uncomfortable mathematics of monetary policy 28 Aug 2010 Emmy wins prove "modern" families are U.S. hits | Video 12:49pm EDT Tropical Storm Earl poised to become hurricane 28 Aug 2010 Pakistan flood relief 1:20pm EDT "We're about to crash," passengers told in error 27 Aug 2010 Study finds first genetic link to common migraine 10:22am EDT Facebook Places just too much information? 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Sun, Aug 29 2010 Analysis & Opinion ANALYSIS-Mining rights issue tarnishes S.Africa’s image African agricultural finance under the spotlight Related Topics World » Striking hospital workers picket in front of the Albert Luthuli General Hospital in Durban August 30, 2010. Credit: Reuters/Rogan Ward By Peroshni Govender and Jon Herkovitz JOHANNESBURG | Mon Aug 30, 2010 3:11pm EDT JOHANNESBURG (Reuters) - South Africa's government and unions representing 1.3 million striking state workers began talks Monday night following President Jacob Zuma's order to ministers to negotiate immediately to end the walkout. Union officials hoped the negotiations will lead to an improved offer to end the labor dispute that has closed schools, prevented treatment at hospitals and harmed investor sentiment toward Africa's largest economy. "I have reason to be optimistic because the employer called us to a meeting," said Manie De Clerq, a spokesman for the Public Servants Association. Public Service Minister Richard Baloyi said in a statement the government will bring a new offer to the table, without offering details. He held informal discussions with union bosses to pave the way for the official bargaining session. So far, the government has said it cannot afford the demand for increases of more than double inflation to end the strike, which threatens to spread across the economy. Even if the government raises its offer, the unions are unlikely to respond quickly as they would need to consult their rank and file members. Zuma's spokesman said the president was particularly concerned about the strike's impact on health and education. "The president's view is that the strike must end as soon as possible, in the next couple of days," Zizi Kodwa said, adding that Zuma had spoken to government ministers at the weekend to tell them to resume talks. "He appealed to both sides to put the interests of the country first," Kodwa said. He did not say what concessions Zuma expected the government to make. South Africa's biggest strike since 2007 in terms of lost man days has left bonds, stocks and the rand largely unaffected, but market players said the strike would cap gains by the rand and could have a bigger impact if it drags on. The workers are demanding an 8.6 percent wage rise and 1,000 rand ($136) a month as a housing allowance. The government has offered 7 percent and 700 rand. BUDGET CONCERNS Analysts expect Zuma and the African National Congress government, which has typically given in to labor's demands, to reach a deal soon, tilted in favor of the unions, and worry later about the damage to state spending. "Politically, this is beneficial for Zuma because he is in a tight spot with the unions at the moment," said Susan Booysen, a political analyst at Wits University. "The country already has a high deficit. The rise may result in higher taxes as the government tries to balance its books." The strike has deepened a rift in the ruling alliance between Zuma's ruling ANC and the country's largest labor federation COSATU, which helped bring him to power but is disappointed with him not advancing left-leaning policies. The continent's biggest economy has been hit by a series of strikes in the private and public sectors in the past few months, which have led to above-inflation settlements. In other disputes, workers at miner Exxaro have rejected an 8 percent raise and another strike at a Rio Tinto-BHP Billiton titanium joint venture saw operations shut down Monday. COSATU has threatened to widen the strike this week to all its member unions who it says represent about 2 million workers. Workers in industries including mining will stage a one-day walk out Thursday with COSATU threatening a prolonged labor action that could bring the economy to a halt unless a settlement is reached in the state workers' strike. South Africa is the world's fourth largest gold producer and largest platinum producer, with mines turning out about 488 kg (1,076 lb) of gold and 385 kg of platinum a day. The country's biggest firms, such as Anglo Platinum, Impala Platinum and Harmony Gold Mining, have stockpiles of the precious metal and would not be hard-hit if it was a one-day work stoppage. 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 totaling 6.7 percent of gross domestic product. (Additional reporting by Matthew Tostevin) (Editing by Michael Roddy) World Add a Comment *We welcome comments that advance the story directly or with relevant tangential information. We try to block comments that use offensive language or appear to be spam and review comments frequently to ensure they meet our standards. 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