JOHANNESBURG, South Africa (AP) _ With the government refusing to negotiate pay raises for public service employees, South Africa's labor unions remained poised today to soon resume the strikes that had some 100,000 workers marching in the streets Tuesday.

Meanwhile, the president of the South African Council of Churches, Bishop Mvume Dandala, appealed to both sides to negotiate.

``While strike action has its place in the democratic process, we must decry the manner in which our society has allowed the power of words to erode,'' Dandala said.

The unions planned to meet Friday to decide what to do next. Labor leaders have vowed to step up their actions.

President Thabo Mbeki, who took over from former President Nelson Mandela just two months ago, has kept a low profile during the labor unrest. But his minister for Public Service and Administration, Geraldine Fraser-Moleketi, ruled out further discussions over wage increases.

Unions are asking for at least a 7.3 percent pay hike to offset workers' losses from high inflation. They accuse the government of violating labor laws by unilaterally implementing a 6.3 percent increase.

South Africa is sorely in need of foreign investors to generate jobs. But Tuesday's strike by unions representing 800,000 teachers, prosecutors, nurses and other public employees shook confidence and helped flatten prices at the Johannesburg Stock Exchange.

``Foreigners are seeing this as the first real test of Thabo Mbeki's government and are stepping back from the market,'' Andile Mazwai, a trader with Barnard Jacobs Mellet in Johannesburg, told Dow Jones Newswires.

Part of the problem stems from South Africa's long-running unemployment woes. A third of the nation's workers are unemployed, and some government experts say that could rise to more than 40 percent within four years.