Unions representing more than 1 million South Africa state workers said on Tuesday they had reached a wage increase deal with the government to avert a mass strike that could have slowed Africa's largest economy.
The unions, once seeking 7.5 percent increases, settled on the government's offer of 6.8 percent and agreed on talks to work out a housing aid benefit plan for state employees.
"Everybody would have liked something higher than that, but in the present circumstances ... I think the 6.8 percent is a responsible and mature settlement," said Chris Klopper, a spokesman for the Independent Labour Caucus federation.
Sizwe Pamla, a spokesman for the NEHAWU health workers union, said state employees wanted to avoid a walkout after a strike last year shut schools and caused chaos in hospitals.
The three-week strike through most of August 2010 cost the economy an estimated $150 million a day, damaged support for the president and led to millions of days of lost work at government offices, schools and hospitals.
The government is the country's biggest employer and the wage bill for state employees has increasingly strained the budget, making it more difficult for the Treasury to reduce a deficit it projects at 5.3 percent of GDP for 2010/11.
The government is saddled with a massive burden to pay employees. In 2009/10, 47 percent of tax revenue went to their wages and benefits.