The South African government has made what it says is a final offer to end a 20-day old strike by civil servants. Both sides agreed to disregard a Wednesday deadline, and postponed until Friday further talks aimed at ending the costly three-week strike. Correspondent Scott Bobb reports on the showdown from Johannesburg.

Public sector workers march with a mock coffin carrying a portrait of Frazer Moleketi, S. Africa's Minister for Public Service

The offer included a 7.5 percent increase in salaries, a 10 percent increase in the housing allowance and merging certain low salary grades with higher grades.

The government also offered to withdraw hundreds of letters of dismissal sent to workers in essential services, like hospitals, who went on strike despite a court order forbidding it.

Negotiators said if the unions did not accept the offer, the government would end the negotiations and revert to its previous, lower package and would proceed with the dismissals.

The chief negotiator for the unions, Tahir Mohammed, told national radio the offer was unfair to workers.

"Labor now is definitely negotiating with a barrel of a gun on its head and that is something that we're not taking kindly to," said Mohammed. "But like I said this is going now to be the decision of our members. They will have to take the [next] step forward."

The unions originally demanded a 12 percent salary increase but during the negotiations lowered this to nine percent.

Several hundrerd thousand workers in public schools, hospitals and government offices went on strike three weeks ago closing most schools and disrupting public health care services.

The strike was mostly orderly. But there was sporadic violence and many private schools closed saying they could not guarantee the safety of their students.

There was considerable public sympathy for the strikers but public support began to wane as sick people were turned away from public hospitals and some schools had to postpone mid-term exams.

Labor experts said some unions were inclined to accept the offer. But the deputy general-secretary of the Democratic Teachers Union, Don Pasquallie, indicated his group would reject the offer.

"We believe that the 7.25 percent [sic] does not address demands and needs of our members and we are saying that the employer needs to improve the offer," said Pasquallie. "If the employer is unwilling to improve the offer we will have further disruption of schools."

The strike has affected both sides. Workers have lost three weeks of pay. The cost of the new wage package is also expected to strain the government budget and aggravate inflation, currently at six percent per year. This could oblige the South African government to raise interest rates in subsequent months.