So far the government has offered a seven per cent wage increase and a housing allowance of 700 rand ($96).
"After a four-day consultation process members ... have unanimously rejected the offer and have insisted on the 8.6 per cent and 1,000 rand housing allowance," the unions said in a joint statement.
"The strike for public service unions will continue until such time that the employer accedes to the demands of the workers."
Although there is not expected to be a significant impact on the country's economy immediately, a lengthy strike could affect commerce and trade.
Rallies are planned outside union members' workplaces, including hospitals, schools and police stations. National rallies are set for August 26.
Dumisani Nkwanba, the spokesman for the ministry of public service and administration, told Al Jazeera: "The government has been very sincere … The question here is the issue of affordability on the part of the state.
"The offer the government has put on the table … we feel is a fair and reasonable offer. We cannot move beyond what we have done now."
Casualties of strike
Al Jazeera's Haru Mutasa, reporting from Soweto, Johannesburg, said the unions do not believe the government when it says that it has no money.
"They say they see politicians living lavish lifestyles, they question why there was money for the football World Cup [staged in South Africa] and say they are tired of corruption allegations in government departments and that they will not put up with it anymore," she reported.
"They are saying that they are not going back to work until their demands are met and that they don't care how long the strike drags on.
"It's going to have a big impact. Schools are shut down … we've heard people have barricaded hospitals. If this strike drags on a lot of people will become the casualties of the strike action."
Last week, a coalition of labour groups staged a partially observed one-day strike.
The government is currently running a deficit of 6.7 per cent of gross domestic product and has said that it cannot meet the demands without cutting public services.
In 2007 hundreds of thousands of pubic workers undertook a four-week strike, which had a severe effect on the economy.