The South African government and unions representing 1.3 million striking state workers plan talks on Monday night following President Jacob Zuma's order to ministers to negotiate immediately to end the walkout.
Union officials hoped the negotiations will lead to an improved offer to end the labour dispute that has closed schools, prevented treatment at hospitals and harmed investor sentiment towards Africa's largest economy.
'I have reason to be optimistic because the employer called us to a meeting,' said Manie De Clerq, a spokesman for the Public Servants Association.
The meeting is planned for 6 p.m. local time (1600 GMT).
Minister of Public Service and Administration Richard Baloyi said in a statement the government will bring a new offer to the table, without offering details.
So far, the government has said it cannot afford the demand for increases of more than double inflation to end the strike, which threatens to spread across the economy.
Zuma's spokesman said the president was particularly concerned about the strike's impact on health and education.
'The president's view is that the strike must end as soon as possible, in the next couple of days,' Zizi Kodwa said, adding that Zuma had spoken to government ministers at the weekend to tell them to resume talks.
'He appealed to both sides to put the interests of the country first. That would mean give and take from both sides in negotiations,' Kodwa said.
He did not say what concessions Zuma expected the government to make.
South Africa's biggest strike since 2007 in terms of lost man days has left bonds, stocks and the rand largely unaffected, but market players said the strike would cap gains by the rand and could have a bigger impact if it drags on.
The workers are demanding an 8.6 percent wage rise and 1,000 rand ($136) a month as a housing allowance. The government has offered 7 percent and 700 rand.
BUDGET CONCERNS
Analysts expect Zuma and the ANC government, which has typically given in to labour's demands, to reach a deal soon, tilted in favour of the unions, and worry later about the damage to state spending.
'Politically, this is beneficial for Zuma because he is in a tight spot with the unions at the moment,' said Susan Booysen, a political analyst at Wits University.
'The country already has a high deficit. The rise may result in higher taxes as the government tries to balance its books.'
The strike has deepened a rift within the ruling alliance between Zuma's ruling African National Congress and the country's largest labour federation COSATU, which helped bring him to power but is disappointed he did not shift policies to the left.
COSATU has threatened to widen the strike this week to all its member unions who it says represent about 2 million workers.
Workers in industries including mining will stage a one-day walk out on Thursday with COSATU threatening a prolonged labour action that could bring the economy to a halt unless a settlement is reached in the state workers' strike.
South Africa is the world's fourth largest gold producer and largest platinum producer, with mines turning out about 488 kg (1,076 lb) of gold and 385 kg of platinum a day.
The country's biggest firms, such as Anglo Platinum , Impala Platinum and Harmony Gold Mining , have stockpiles of the precious metal and would not be hard-hit if it was a one-day work stoppage.
Any agreement to end the dispute is likely to swell state spending by about 1 to 2 percent, forcing the government to find new funds just as it tries to bring down a deficit totalling 6.7 percent of gross domestic product.
Spending on personnel is the biggest category of state expenditure, taking up about a third of the budget. In 2006/07, about 35 percent of tax revenue went to paying state employees and that rose to about 47 percent in 2009/10.
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