Update: South African employer body accepts government proposal to end strike

JOHANNESBURG (Reuters) – South Africa's main metals employer body has "reluctantly" accepted a government proposal to raise wages by up to 10 percent, it said on Tuesday, raising hopes of an end to a strike sapping the continent's most advanced economy.

The Steel and Engineering Industries Federation of South Africa (SEIFSA) said striking unions had until Friday to accept the offer, which it warned could lead to heavy job losses.

More than 200,000 workers affiliated to the National Union of Metalworkers of South Africa (NUMSA) downed tools on July 2, demanding 12-15 percent wage increases.

The stoppage has disrupted the supply of car parts and affected construction work at two crucial power stations for state utility Eskom.

Under the proposal put forward by Labour Minister Mildred Oliphant, SEIFSA agreed to raise wages by between 7 percent and 10 percent over the next three years.

This would "inevitably lead to massive job losses" as companies sought to cut costs because they would not be able to pass on the increases to their customers, SEIFSA Chief Executive Kaizer Nyatsumba said in a statement.

The Federation also said it would not sign the agreement unless parts of South Africa's current wage negotiation guidelines were amended to scrap two-tier bargaining at the plant and national level.

It was not immediately clear if NUMSA and other smaller unions would accept the deal.

The industrial action has dealt a further blow to the ailing South African economy, coming almost immediately after a five-month strike by miners in the platinum sector.