Johannesburg — THE state's revised wage offer to public servants hit new obstacles yesterday, with unions at odds over whether to end their strike and the Congress of South African Trade Unions (Cosatu) indicating the stoppage will continue.

The action by 1,3-million public sector workers has brought state services to a near-halt, and put the ruling African National Congress's (ANC's) alliance with its trade union and communist partners under severe strain.

Last night, Cosatu's Zwelinzima Vavi said Cosatu had rejected the government's improved offer of a 7,5% pay increase and an R800 housing allowance.

"The strikes will continue and we will continue to consult our members," Mr Vavi said, hinting there was still scope for a deal.

His stance followed a hardening of attitudes among leaders of Cosatu-affiliated unions.

The largest health union, the National Education, Health and Allied Workers Union (Nehawu), rejected the offer, and the biggest teacher union, the South African Democratic Teachers Union (Sadtu) was headed for a split.

Sadtu regions and Nehawu held out for an 8,6% pay increase and R1000 housing allowance.

Sadtu leaders were due to conduct a late-night teleconference to decide on the offer after four regions - KwaZulu-Natal, North West, Eastern Cape and Limpopo - rejected the revised offer, putting pressure on Sadtu's leadership to widen consultations.

"Nehawu has rejected the offer," said spokesman Sizwe Pamla, ahead of a Public Service Bargaining Council meeting.

Despite smaller unions such as the Suid Afrikaanse Onderwysersunie (a teachers union) and the Public Servants Association appearing more conciliatory, their membership is largely confined to more affluent areas.

A split settlement would thus leave most workers staying away from public schools and hospitals, affecting SA's townships and rural areas the worst.

Although Suid Afrikaanse Onderwysersunie leader Chris Klopper would not be drawn on whether or not his union would take the government's offer, he was hopeful a settlement could be reached soon, but said that "things are 50-50".

Yesterday the negotiations appeared to have been caught up in technicalities, with several unions also battling to get clear mandates from their members in the time available.

Sadtu's Nomusa Cembi said the union needs time to consult its members.

"We need to consult thoroughly, it's no use rushing when we haven't satisfied our members," she said.

Special adviser to Public Service Minister Richard Baloyi, Randall Howard, referred to missed time frames, saying "everything is running slightly late". The two sides met at the bargaining council last night after they were unable to meet yesterday morning.

Public Servants Association deputy GM Manie de Clercq said an earlier meeting was not possible as it was set too soon after protracted negotiations.

"You can't have people who haven't slept for two days to draft the agreement," he said.

Yesterday Cosatu affiliates announced the suspension of a secondary strike that had been due to begin today.

But the federation said should a resolution not be reached, its affiliates would be ready to take solidarity strike action in support of the public service workers.

The heightened pace of the negotiations followed the intervention of President Jacob Zuma, who at the weekend urged the parties to return to the bargaining chamber.

Mr de Clercq said there had been pressure for the unions to finish consulting their members over an unrealistically short period. However, Mr de Clercq said this did not prevent unions from making their decision.

Government spokesman Themba Maseko said yesterday that a press briefing will be held in Pretoria today.

"We are optimistic that a settlement will be reached," he said.

The Communications Workers Union took Mr Zuma to task for embarking on a state visit to China in the midst of the strike. In KwaZulu-Natal, the South African Communist Party's provincial secretary, Themba Mthembu, blamed Mr Zuma's "bad" advisers.

Labour analyst Andrew Levy said he expected a split settlement to be reached, saying any lack of acceptance would be a "purely political and not rational economic decision".

Economist Mike Schussler criticised the government, saying it has "taken the easy way out" by just granting a big wage increase and not looking at a detailed breakdown of pay in the public service.

Car workshops and petrol stations were also hit by strikes yesterday as workers demanded a wage increase of 15% and employers offered 6,6%.

BMW SA said that due to the component industry strike, the second shift yesterday, today and tomorrow have been cancelled without pay.

Volkswagen SA said that it will shut down its manufacturing plant in Uitenhage until further notice.

With Sapa, Reuters, Beth Shirley.