The 8,6% wage increase demanded by public service unions is simply not affordable, government spokesperson Themba Maseko said on Thursday.

Briefing the media following Cabinet's fortnightly meeting on Wednesday, Maseko said that Cabinet was disappointed with the unions' rejection of the State's offer of a 7% annual increase and R700 a month housing allowance.

"The offer is already way above the inflation rate of 4,5%," he said.

The State's final offer represented a move from the original offer of 5,2% and a R500 a month housing allowance.

"This is a clear demonstration that government was negotiating in good faith in an attempt to meet the demands of our employees," Maseko said.

While government fully understood and appreciated the plight of public servants regarding low wages, it had to be mindful of its responsibilities to all South Africans as the final offer already placed a huge burden on the fiscus.

"We had to make a choice between increasing the salary bill to unaffordable levels by meeting the union demands and cutting other urgently needed services.

"It's a choice between improving the wages of state employees and continuing to address the service delivery needs of poor communities and the unemployed," he said.

The final offer would have a carry through effect of a further R2,7-billion in the 2011/2012 financial year.

"The 8,6% demand is simply not affordable as every additional cent spent on salaries means less money for other essential services to the public."

Increasing personnel spending meant that there would be less money for education, learning materials, health care and health facilities, medicines, roads, economic infrastructure and other essential services that were part of government's electoral mandate.

"It also means that we cannot employ more teachers and nurses."

Government believed that it would be unwise to borrow money to finance current spending, as this would continue to place an untold debt burden on future generations.

Maseko said that government would continue to strive for the improvement of the working conditions of its employees within reasonable bounds.

Future salary negotiations should take into account other important policy considerations, such as the need to link wage growth to productivity, assessment of unit costs of government labour in relation to trends in the rest of the economy, and, most importantly, the impact of a high wage bill on employment policy.

Such a discussion should also address the income gap in the public and private sectors. Although the R700 a month housing allowance was what was affordable at this stage, Cabinet acknowledged that this amount did not necessarily respond adequately to economic realities experienced by its employees.

"However, we appeal to the unions to appreciate that this is what is affordable at this stage." Cabinet noted there was a need to explore other suastainable approaches to assist South African workers in general who could not access housing loans from the banks due to low wages.

Government was willing to discuss this challenge with the unions after the resolution of the current impasse, he said.

Cabinet condemned unreservedly the violence, intimidation and the acts, bordering on thuggery and criminality, which had characterised the strike in parts of the country.

While the majority of public servants had protested peacefully, the disruption of classes and health facilities was totally unacceptable and would not be tolerated.

Those who broke the law should not expect any sympathy from the law enforcement agencies.

Cabinet was particularly disappointed by teacher union leaders who continued to make threats to disrupt schools and encouraged their members to embark on illegal activities.

Cabinet was also concerned about the talk of an indefinite strike especially in the education sector at the expense of young learners who were just about to sit for the year-end examinations. "Government calls for sanity and common sense to prevail," Maseko said.

Measures were already underway to reduce spending in government departments to fund the final offer.

The ministerial committee on reducing wastage was in the process of finalising its proposals on cost-cutting measures.

The Minister's Committee on the Budget (MinComBud) would finalise spending guidelines for the next financial year with a view to regularising austerity measures across the state departments in all spheres, Maseko said.