A strike by South African public sector workers planned to start on Monday was called off after most trade unions accepted a government pay offer that exceeds Treasury provisions for salary increases.

The stoppage was cancelled when more than 50% of unions in a bargaining council agreed to the wage settlements.

Affiliates of Cosatu trade union, which is closely aligned with the ruling African National Congress and represents the bulk of 1.3-million teachers, police officers and nurses, signed the three-year wage deal. This awards increases of up to 7% in the first year, and of up to projected inflation rate plus 1% in the second and third years.

The National Treasury has previously warned about high wage settlements and their potential impact on South Africa's struggling economy.

"The agreement has now been signed by a 65.74% majority of all parties, therefore as government we understand that all forms of industrial action now fall away," Ayanda Dlodlo, the minister of public service and administration, said in a statement on Friday.

She said the deal, which includes a better housing allowance, exceeds by R30-billion ($2.30-billion) provisions made by the Treasury for salary increases over the next three years of R110-billion.

Dlodlo added that the government would look to streamline the public sector with early retirement and severance packages.

South Africa's volatile was buffeted earlier in June when data showed gross domestic product shrank by 2.2% in the first quarter of 2018, with significant falls in agriculture, manufacturing and mining.

Hundreds of members of the Public Servants Association did stop work on Monday at the South African Social Security Agency (SASSA), but the strike was largely symbolic as they were only a small proportion of the PSA 230,000 members.