Government is seeking an urgent resolution to the crippling public sector strike, which is costing the South African economy an estimated R1-billion-plus a day, Finance Minister Pravin Gordhan said on Thursday.

While workers had a right to strike, he criticised striking employees for the accompanying violence and intimidation.

About 1,3-million unionised employees walked out in a standoff last Wednesday, crippling health and education services.

Gordhan, who was awarded the Rotary Club ‘Achiever of the Year' award on Thursday night, said that government and unions were both actively seeking a settlement that would be fair to all.

"One of the big problems in South Africa, is the fact that such large gaps exists between the base salaries of workers and that of top executives, especially in the private sector, this causes a lot of dissatisfaction and is an issue that needs to be addressed."

The R5-billion unplanned expenditure that would arise from the government's higher-than-expected wage offer of 7% and R700 monthly housing allowance, would place a burden on the country's fiscus and would result in a carry-through effect of a further R2,7-billion in the 2011/12 financial year.

Unions are demanding an 8,6% salary increase and a R1 000 a month housing allowance.

Gordhan said that South Africa needed sustainable growth of around 7% for the next 20 to 30 years to relieve poverty and create higher levels of job creation.

The government is busy devising a labour-absorbing economic growth strategy, and hopes that business and labour will commit themselves to it later this year.

South Africa achieved lower-than-expected growth of 3,2% during its second quarter and the Minister said that this reconfirmed that the economic environment was still experiencing great uncertainty. "It is like a roller-coaster ride and we will have to wait and see if it will do a double dip."

The country's slowing recovery and lower inflation data for July, has increased speculation that the Reserve Bank would cut the repo rate from 6,5% at the next Monetary Policy Committee meeting.

"The continuing downwards trend of inflation is interesting, and it would be taken into account, together with growth numbers that could necessitate further monetary support."

However, he pointed out that the above 3% growth indicated that South Africa was showing stable and consistent growth that was satisfactory for the short to medium term, but added that higher growth and production was definitely needed in the longer term.

The Minister said that government would be looking at restructuring the country's economy to put it on a new growth trajectory. "An important aspect of this would be an effective industrial policy plan and removing blockages that prevent the private sector to capitalise on its potential."

Gordhan emphasised that it was important for government and small business to work together and that each sector of the country's economy provided huge opportunities for such collaboration.

"But we have to stop debating about policy and go out there and start trying a few things, create a new momentum of initiatives that will provide a bolder output," he concluded.