UPDATE 7-S.Africa gold miners agree pay deal, avert strike
* Gold and coal miners' union sign wage agreement
* South African unemployment rate increases
* Township protest continues
(Adds signing of gold agreement, township protest, colour)
By James Macharia
JOHANNESBURG, July 28 (Reuters) - South Africa's biggest union agreed a wage deal with gold and coal producers on Tuesday, averting a strike in the crucial mining industry and easing political pressure on President Jacob Zuma.
But council workers stayed on strike for a second day in the latest stand-off between Zuma and the unions, who helped sweep him to power in an April election and now want the president to fulfil his promises to help improve living standards.
South Africa is suffering its first recession since 1992 which unions say has hit the country's poor hardest.
The National Union of Mineworkers (NUM) and other unions signed the new two-year gold and coal pay agreements, said the Chamber of Mines, which represents gold and coal producers.
The union accepted a wage offer of between 9 and 10.5 percent in the gold sector -- where South Africa is the third biggest global producer -- after initially demanding a hike of 15 percent. Annual inflation stands at 8 percent. The 150,000-strong gold sector is a major foreign exchange earner and symbol of South Africa's economic power.
In downtown Johannesburg, hundreds of striking refuse collectors overturned trash cans.
A man who identified himself as Gabriel told radio station Talk Radio 702 how he had not been able to bury his two-month-old daughter because the cemetery was closed by the labour action.
Less than three months after he took office following the ruling ANC's election victory, Zuma is caught between delivering on promises to improve the lives of the poor and the realities of an economy in recession.
Tens of thousands of council workers stopped work on Monday over their demands for a 15 percent wage hike. The strike has so far not hurt financial markets but economists say that could change if the dispute persists.
The strike by public transport workers, refuse collectors and licensing officers follows days of violent protests by residents of impoverished townships who have complained about lack of healthcare, water and electricity.
Protests over poor housing and unemployment continued in Thokoza township southeast of Johannesburg. Police fired rubber bullets at protesters who burned tyres and blockaded roads.
Unions have also pressed for bigger interest rate cuts, challenging central bank policy.
Labour Minister Membathisi Mdladlana warned against further violence, saying unlawful actions were "demonising the real concerns of the majority of the workers", SAPA news agency said.
The South African Municipal Workers Union (SAMWU) and Independent Municipal and Allied Trade Union, representing some 150,000 council workers, said it was considering a better offer and would decide on Wednesday whether to call off the strike.
SAMWU said this week 70 percent of council workers earn less than the 5,000 rand ($645) monthly minimum wage the union is demanding.
Workers in the chemical sector have been on strike over higher pay and the Communication Workers' Union, representing workers at public broadcaster SABC, said members would strike on Wednesday and Thursday over the implementation of a wage deal.
Official data on Tuesday showed unemployment in the second quarter at 23.6 percent, a slight increase on the previous quarter, with 4.125 million people out of work.
"These figures clearly confirm COSATU's view that we are in the throes of a national unemployment emergency," said the powerful COSATU trade union federation, whose backing was instrumental in Zuma's rise.
Although the strikes don't appear to have rattled Zuma, they may force him to move more quickly to meet the demands of his union allies, analysts say.
Peter Attard Montalto, emerging market economist at Nomura International, said: "The real test is only beginning now, I think he obviously came to power with a mantra of change. That is what is driving all these strikes." (Additional reporting by Stella Mapenzauswa and Alison Raymond; Writing by Marius Bosch; Editing by Jon Boyle)
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