UPDATE 1-South African govt wants to renege on public sector wage deal - unions

The South African government wants to renege on a three-year public sector wage deal struck in 2018, and not pay public servants the agreed increased pay for the final year starting April 2020, trade unions said.

Public sector union NEHAWU said in a statement on Wednesday the move was "a declaration of war" and threatened to shut down government indefinitely, if Finance Minister Tito Mboweni announces a freeze on public sector wages during a budget speech later on Wednesday. NEHAWU is one of the largest members of the COSATU trade union federation that is in an alliance with the governing African National Congress party.

COSATU said in a separate statement that reviewing the terms of the 2018 deal was an "irresponsible and blatant act of provocation". But economists and ratings agencies are likely to view the government's attempts to take a harder line with unions favourably.

Public sector wages have been rising quickly at a time of severe fiscal constraints and now account for around a third of consolidated government expenditure. The finance ministry, which is in a budget lockup, was not available for comment.