(Recasts with union statement, changes dateline)
By Peroshni Govender
PRETORIA, Sept 6 (Reuters) - South African public sectorworkers suspended a pay strike on Monday as it entered itsfourth week, union officials said.
The strike by 1.3 million workers has affected education,healthcare and the judiciary. Strikers have demanded a doubleinflation 8.6 percent pay rise and a 1,000 rand ($135) a monthhousing allowance.
"Labour has decided to suspend the strike and this does notmean we have accepted the state offer," 19 unions representingthe state workers said in a joint statement.
The unions said they had 21 days to finalise discussionswith their members on a draft agreement.
President Jacob Zuma's government raised its offer to 7.5percent and 800 rand for the housing allowance last week butworkers rejected the deal and unions asked for more time toexplain the offer to their members.
Government officials said the state could not afford theoffer they had already put on the table and there was no moreroom in the budget to increase the offer, which would swellstate spending by about 1 percent.
The biggest strike since 2007 in terms of lost man days hasleft bonds, stocks and the rand largely unaffected, but marketplayers said the strike would cap gains by the rand and couldhave a bigger impact if it drags on.
Economists predict that the labour action is costing theeconomy about 1 billion rand a day. (Writing by Marius Bosch; Editing by Matthew Tostevin)