* Currency intervention "too complicated" to implement
* Reforms should focus on labour laws, education - analysts
* COSATU wants rand at 10.00 to dollar
* Analysts say capital controls not appropriate for S.Africa
By Phumza Macanda
JOHANNESBURG, Sept 17 (Reuters) - South Africa's ruling ANC is unlikely to push for a tax on short-term capital inflows and risk deterring investors but may stick to supporting the central bank in it efforts to curb the rand's strength.
The party holds its mid-term policy review conference on Sept 20-24 amid considerable scrutiny of its economic policies. The loudest criticism is coming from its alliance partner COSATU, the largest union federation in the country.
Economist say that To propel economic growth and create jobs, Africa's largest economy needs a more skilled labour force, lower wages that attract investors, relaxed labour laws, and an industrial policy supportive of exports.
The ANC will next week spend time discussing the rand, which hit a 2-1/2 year high of 7.0540 to the dollar this week, increasing calls to weaken it to support exports.
But economists say the African National Congress is unlikely to plump for major currency intervention.
"The odds are 100-to-1 that we will see any intervention policy after next week, very slim. They'll talk the talk but in terms of walking they won't do that," said Lumkile Mondi, chief economist at the state-owned Industrial Development Corporation.
"(Currency intervention) is way too complicated and this ANC leadership does not have a long-term plan and has not been able to make serious decisions," he added.
COSATU points to persistently high unemployment, yawning income gaps and widespread poverty as proof the ruling party's investor-friendly policies have failed the poor.
Some 40 percent of the workforce in the country of 50 million are jobless and live in chronic depravation 16 years after the end of appartheid.
The union blames a strong rand for some of the economic ills and has said it wants the rand at 10.0 to the dollar.
Authorities have acknowledged the economic imbalances due to rand's strength but are grappling with what to do about it.
CURRENCY INTERVENTION
The ANC will debate a proposal to tax short-term capital inflows, which are partly responsible for the rand's gains of more than 35 percent since the beginning of 2009.
But senior party officials have been largely indifferent to the idea, saying such a tax was not imminent, and that capital controls would be just one of many options on the table.
National Treasury Director General Lesetja Kganyago has said capital controls would be a bad idea.
On Thursday Finance Minister Pravin Gordhan said South Africa was studying other countries' experiences with capital controls.
However, South Africa's heavy reliance on foreign capital inflows to fund its current account deficit make direct comparisons difficult, analysts say.
"We don't have a particularly strong trade balance and that leaves us a little bit vulnerable because we are reliant on portfolio flows to finance some of that gap," said George Glynos, managing director at ETM market analysts.
He said countries such as Brazil, Indonesia, Taiwan and South Korea, which have strong trade balances and are less reliant on inflows, have had limited success with capital controls.
In October, Brazil began charging a 2 percent tax on capital inflows into stock and fixed-income markets. This helped to slow gains in the real but not substantially and the country has not ruled out further intervention..
TENSIONS IN ALLIANCE
Under former President Thabo Mbeki, a British-educated intellectual, the ANC introduced market-friendly policies that saw the country experience its strongest decade of economic growth.
Leftist allies of the ANC, COSATU helped to unseat Mbeki, hoping the party would adopt its policies. But the ANC has stuck to Mbeki-era policies and even on the rand, will likely be pragmatic in its approach.
Rather than taxing inflows, the ANC may opt for helping the South African Reserve Bank quicken its build-up of foreign exchange reserves -- measures that can also weaken the rand.
The central bank has repeatedly said it will leave the currency's level "up to the market".
In August the central bank started using currency swaps, a tool Gordhan said was aimed at curbing the rand's volatility.
"The economic problem does not come from the rand but from the bad economic structure that needs to be fixed," said Gabor Ambrus, emerging market analyst at 4CAST. "Focusing on the rand is short sighted. The problem is the high unemployment rate."
Failure to come up with a solution is likely to increase tensions between the ANC and COSATU.
While the ANC may want to appease the unions, it is unlikely to do so on the currency front. (Additional Reporting by Ed Stoddard; Editing by Ron Askew)