Thousands of striking state workers held marches in major cities nationwide calling on the government to end a strike by about 1.3 million of its unionized employees that has shut schools and cut off medical treatment at hospital.
"The alliance is unable to convene a summit for fear of an implosion as a result of fundamental differences on the question of where power lies," COSATU Secretary-General Zwelinzima Vavi said in a statement from the group that says it has 2 million members.
"The alliance is again dysfunctional; the center cannot hold," he said in the statement read to reporters.
The comments are some of the strongest indications that organized labor, which helped President Jacob Zuma ascend to the presidency, may be willing to cut a relationship with the ANC forged in their struggle to end apartheid.
The state workers' strike has had no major impact on rand and bond trading but market players said worries would mount if it extended to September and was joined by other labor groups.
COSATU said it filed 7-day strike notices on Thursday so all its members could join the state workers in a strike they said would then hit mining and manufacturing, grinding the country to a halt.
Several hundred thousand COSATU members are already taking part in the state workers' strike.
The leader of the ANC's Youth League Julius Malema also fired what amounted to a warning shot at Zuma on Wednesday night, questioning his leadership and implying the ruling party's youth wing will not support Zuma for a reelection bid.
The government has said it cannot afford the state workers' demand of an 8.6 percent wage rise, more than double the inflation rate, and 1,000 rand ($136) a month as a housing allowance. It has offered 7 percent and 700 rand.
The lowest-paid public servants make 40 percent less than the average worker, who earns 6,383 rand a month in salary and benefits. Mid-range public servants make about 40 percent more than average.
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 totaling 6.7 percent of gross domestic product.
An expanded strike would add to worries about prospects for growth after the economy slowed more than expected in the second quarter of 2010 as mining contracted, while expansion in manufacturing was lower than before.
In Johannesburg's Soweto township, where police have clashed with strikers trying to block entrance to a hospital, the anger was building at the government for not reaching a deal and at strikers who were denying services to the poor who rely on their help.
"We work for the government and we live in shacks," said one healthcare worker who only identified himself as Joseph.
