* Trade unions renew demand for no inflation target
* Wider focus on jobs, growth not enough
* Finmin Gordhan says c.bank letter calls for flexibility
JOHANNESBURG, Feb 18 (Reuters) - South Africa's trade union movement on Thursday renewed its demand for inflation targets to be scrapped, dismissing Treasury suggestions that the framework would focus more than before on jobs and growth. Finance Minister Pravin Gordhan kept the inflation target of 3 to 6 percent intact in Wednesday's budget but added he had written to the central bank stressing the need for it to be flexible in its approach, taking other factors into account.
COSATU, an influential ally of the ruling ANC, said the move to make the central bank's focus more flexible was not enough as the Reserve Bank had always claimed it was not overly focused on the target.
"We had expected that monetary policy will be changed to target employment directly, as a primary focus of policy, as pointed (out) in the election manifesto of the ANC and in the various meetings of the (ANC, COSATU and Communist party) alliance," it said in a statement.
"We will, therefore, escalate our struggle for the scrapping of inflation targeting, because we are of the view that the persistently high unemployment rate, strong exchange rate, and de-industrialisation of our economy are due to the policy of high interest rates, of which inflation-targeting is a form."
South Africa's official jobless rate climbed to almost 25 percent by the end of last year, and is a major concern for the government and a stumbling block for the economy as a whole.
COSATU and the African National Congress' other left-wing partners argue that efforts to contain inflation have kept interest rates too high, adding to job losses during last year's recession.
The alliance agreed last year that the bank's mandate should be made broader.
The labour federation has become increasingly vocal in its demands for economic policy change since helping Jacob Zuma to the presidency of the ANC and later government.
Its critics though say the Reserve Bank has taken growth into account in its interest rate decisions, having cut the repo rate by 5 percentage points to 7 percent between December 2008 and August last year despite inflation being outside the top end of the target range.
The reductions unwound rate hikes made in the two years until June 2008.
It left the repo rate steady at last month's meeting, angering COSATU which wanted another cut to help the economy recover more quickly from recession, and following nearly 900,000 job losses last year.
Gordhan said in radio interviews on Wednesday and Thursday that a letter he sent to central bank Governor Gill Marcus stressed the need for a focus in line with COSATU's demands.
He said the mandate of the bank took into account the need for sustainable economic growth.
"In trying to achieve that target, be careful that you (central bank) are mindful of what is happening in the economy more broadly and don't make adjustments that create shocks in our system. That is different," he told SAFM radio.
"Don't be too focused on inflation itself, look at the broader issues."
Gordhan writes in the letter, dated Feb. 16, that the time frame to bring inflation back to the target range should avoid unnecessary instability in output and interest rates.
"Notwithstanding the imperative to anchor inflation expectations, I wish to confirm that the existing framework allows for temporary deviations of inflation from the target in the event of shocks over which monetary policy has no control," it says.
"The policy response should have due regard to the factors that might impact on the attainment of balanced and sustainable growth." (Reporting by Gordon Bell; editing by Stephen Nisbet)