* COSATU likely to increase pressure on government
* Unions want payback for helping Zuma to power
* More strikes expected, economy likely to suffer
By Marius Bosch
JOHANNESBURG, July 6 (Reuters) - South Africa's powerful trade unions will continue to escalate strike action, endangering key sectors in an economy already in recession, unless President Jacob Zuma's government meets demands for pro-poor policies.
Increased strike action from unions under the COSATU labour federation is a sign they are starting to force their agenda in Africa's biggest economy in the absence of a strong stand by Zuma.
"It is all about the power to determine policy. We are going to see increased labour and industrial action in the coming months," said Leon Myburgh, sub-Saharan Africa specialist at Citigroup.
COSATU, in an alliance with Zuma's ruling African National Congress and the South African Communist Party, has pushed for a policy shift to the left to benefit workers and the poor.
Zuma has assured investors that long-term policy will not change. New Finance Minister Pravin Gordhan has stressed that while the government will engage with all groups, the country has not abandoned market-friendly policies.
But Zuma's efforts to appease labour and avoid the tensions that led to the ousting of former President Thabo Mbeki last year have not been enough to win over the unions who were instrumental in bringing him to power in May.
"At the end of the day, it comes down to what signs we are getting from Zuma and as long he is not giving a clear direction on these issues, there will be constant noise until he can give a clear policy," Citigroup's Myburgh said.
With South Africa's economy in its first recession in 17 years, Zuma has little room to give in to union demands.
The government has forecast GDP growth of 1.2 percent this year, but the Treasury said this will likely be revised downwards in an October budget statement.
NATIONAL STRIKE THREAT
In the latest strike action, nearly 70,000 construction workers will down tools on Wednesday over wages, which could halt work on stadiums for the 2010 Soccer World Cup.
Unions at state broadcaster SABC will also strike this week, raising the possibility of a nationwide television blackout for the first time since television arrived in South Africa three decades ago.
Gold miners and the mineworkers' union NUM, which has vowed to strike if pay demands are not met, meet on Tuesday for a key meeting on wage talks while unions in the platinum, chemical, paper and petroleum sectors have also warned of strikes.
COSATU has also threatened national strikes.
"There is potential for this to escalate," said Mike Davies, Middle East and Africa analyst at Eurasia Group.
"There will be areas of tension that will develop, not only over strikes but a broader tension is likely to arise between the unions and the alliance partners," Davies said.
COSATU last week backed a call by the ANC's militant youth wing for mines to be nationalised, a thorny issue in the world's biggest platinum producer and the no. 3 gold producer.
"The news is clearly worrying. There is some struggle within the ANC (alliance) to change policy direction, for payback of what the left sees as its dues for getting Zuma to power," said Peter Attard Montalto, emerging markets economist at Nomura in London.
COSATU nearly blocked the listing of mobile phone group Vodacom in May and has called for bigger interest rate cuts from the central bank -- all indications that the grouping plans to play a bigger role on the political stage.
"We saw that with the Vodacom issue, that was the first flaring up of that. And now these smaller strikes, and then the threat of the general strike which is still hanging over us," Nomura's Attard Montalto said.
"I think markets are really watching Zuma, to take a stance on this."