JOHANNESBURG (Reuters) - More than 1 million South African public sector union members seeking higher wages have threatened to bring the government to a halt on Tuesday with a one-day nationwide strike.
The following scenarios look at what may come next in the dispute that could threaten commerce and swell the budget in Africa's largest economy:
GOVERNMENT BENDS TO UNIONS' DEMANDS
* The one-day strike seems increasingly likely and analysts said it could well force the government into making a deal.
* Precedent of workers at state-owned firms getting wage increases of more than 8 percent, roughly double the country's inflation rate, bodes well for public sector workers receiving pay hikes close to their demand of 8.6 percent.
* Ruling African National Congress' (ANC) goal to cut a deficit of 6.7 percent of GDP will come under pressure due to the need to assuage long-time union allies who feel they are owed favours after helping Jacob Zuma ascend to the presidency.
* The government last week raised its pay offer to 7 percent from a previous 6.5 percent and unions said it slightly increased its offer of 630 rand ($85) a month for the housing allowance. Unions want 1,000 rand for housing.
UNIONS TRY BRINKMANSHIP
* Organised labour will force the government's hand by threatening a prolonged walkout of civil servants in a strike that could be as severe as a 2007 labour action, which dented the economy.
* Various unions follow the Tuesday walk out by laying down tools to increase pressure.
FULL SCALE STRIKE
* Analysts expect a deal to be reached before a prolonged mass strike but union anger has been brewing against Zuma and the ANC for not pushing policies that benefit workers.
* Unions may try to gain the upper hand politically with an all-out, prolonged strike that would tarnish Zuma as he heads into a crucial ANC policy-setting meeting in September.
* If they had not already given in to demands, Zuma and his government would quickly surrender to the pressure of a full-scale strike and keep any such action short.
BUDGET WOES
* The government will have greater difficulty trimming its yawning budget deficit due to its high wage bill, already a third of total spending.
* Zuma's ANC has little room to cut spending or risk alienating loyal voters by failing to deliver on promises of electricity, running water and quality education to the country's legions of poor.
* State borrowing could rise, worrying ratings agencies and making it more costly to issue new debt.
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