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workers including nurses, teachers, police, customs officials and immigration officers rejected a 6.5 per cent government wage offer last week, demanding an 8.6 per cent increase and a 1,000 rand ($130) monthly housing allowance.

The walkout could slow down trade and tourism for Africa's largest economy. Their demands are more than twice the annual rate of inflation, which slowed to 4.2 per cent in June, according to official data released on Wednesday.

Industrial action had initially been planned for today, but unions said they would only serve formal notice of their plan to strike yesterday, giving the government seven days to come up with a better offer.

'We are not going to announce a date now until the end of the seven date notice period,' Majola said. Workers at state power utility Eskom won a nine per cent pay increase early this month after threatening to strike during the June 11-July 11 football World Cup.

Transport sector workers won a similar settlement in May after a three-week strike that cost nearly $1 billion in lost production and sales.

— Reuters