Johannesburg — THIS week's strike by the main four trade unions at Transnet is a new and important test for the relationship between government and labour. Critically, it will show just how firm government is prepared to stand on its new economic strategy in the face of intense trade union opposition.

Tension between government and labour over Transnet is nothing new. It's been going on for more than a decade, ever since government first decided to pursue a privatisation strategy, to which labour vehemently objected. These objections were based on a wide range of issues, both ideological and practical, but at the heart of the matter they were about jobs. International experience showed privatisation of a big state asset inevitably led to job losses as new private operators sought to streamline operations and improve profitability.

Transnet remains one of the country's biggest employers. Its creation during the apartheid era sought to bring the management of SA's vast transport network under one roof, but it also gave jobs-for-life to whites. It became a vast, bloated bureaucracy which, at its height in the early 1990s, employed almost 200000 people.

This has been reduced over the past decade or so as successive management teams have tried to gain control over the business. But it remains a formidable employer, with labour having persistently resisted all attempts by government to reshape the business by selling parts of it or bringing in private partners. In this, Transnet's trade unions have been spectacularly successful. A host of restructuring strategies have been shelved after heated trade union resistance, repeatedly forcing government and management to go back to the drawing board.

But this time, labour may have miscalculated. Government's strategy with Transnet is fundamentally different from what it was two years ago. Privatisation is no longer on the table -- rather, Transnet now forms a critical part of government's plan to get the economy to grow at 6% by 2010. Details of this strategy, dubbed the Accelerated and Shared Growth Initiative, are to be released later this week. Broadly speaking, its objectives include raising investment in infrastructure, improving efficiencies, beefing up skills and lowering the cost of doing business.

Transnet, which controls the railways, ports, pipelines and planes, is needed to achieve this, having promised to spend more than R40bn on infrastructure over the next five years. But if it is to be of any use in helping achieve government's aims, it has to be financially healthy -- and until very recently, it was in deep trouble. With a loss of R6bn in 2003-04, high debt levels and an unfocused structure, swift decisions were needed to shore up the balance sheet and inject new life into the flagging entity.

Transnet CE Maria Ramos has thus decided to focus on Transnet's core business of transporting freight, and offload the rest. The biggest employers -- rail operators Metrorail and Shosholoza Meyl -- will be brought under government while South African Airways will become a standalone entity. The noncore assets (13 in total) will be sold, with the proceeds going to strengthen Transnet's balance sheet.

It is the latter that the trade unions are striking over, claiming Transnet has not negotiated their sale with labour. They want the employment conditions of the affected workers to be guaranteed. The chances of that are slim, given that many are money losers.

And, this time around, government and Transnet management are sticking together. They know they have a politically defensible plan. The problem is that a transport strike, if protracted, could cost the economy hundreds of millions of rand. It now seems to be a question of who will blink first. And for the sake of the future of our economy, it shouldn't be government.