President Thabo Mbeki’s government is committed to fiscal discipline in order to attract desperately needed foreign investment, but its constituents are under mounting pressure in an economy showing no more than 2 percent growth –- and suffering painful blows in such key sectors as gold mining. "The increase demanded by the striking workers really isn’t much more than the inflation rate," says TIME South Africa bureau chief Peter Hawthorne. "The government may be forced to compromise and tighten the belt in other areas, such as military expenditure." Absent the moral authority of retired president Nelson Mandela, Mbeki may find it difficult to resolve the mounting tide of labor conflicts and avert major social disruption. But at least the government is leading by example: While it’s offering public sector employees a 6.3 percent increase, members of parliament and government officials will receive only a 4 percent raise. That may be little comfort, though, to millions of South Africans struggling to make ends meet.
It was just like old times in South Africa: Tens of thousands of unionized workers marching through the streets of Pretoria under the wary eye of police in armored vehicles, waving their fists and chanting their defiance in the face of an unyielding regime. This time, however, the ruling party is the African National Congress, which those same workers helped bring to power –- and the protest signifies the end of the post-apartheid honeymoon between socialist-inclined big labor and their market-oriented allies in government. After seven months of bitter negotiations, the two sides have failed to agree on a wage increase for public-sector employees, and the unions on Tuesday mounted a one-day national strike as a warning shot of industrial action to come.