ANALYSIS - South Africa cabinet structure changes worry investors

By Peroshni Govender

JOHANNESBURG (Reuters) - Changes to the way South African President Jacob Zuma's cabinet operates and the resignation of a senior policy maker have stirred investor fears that unions are shifting economic policy to the left.

Zuma this week announced new cabinet clusters, tasked with planning and decision-making, that left out former finance minister Trevor Manuel, who was widely respected by markets and now heads a new planning commission.

The resignation of Joel Netshitenzhe, an architect of policy since the end of apartheid, added to concerns that Zuma may be bowing to labour and communists, who are allied with the ruling African National Congress and helped bring him to power.

"I am concerned that a slow victory of the left is taking shape in so far as interest groups are placing themselves in positions of power," said an analyst with a financial services firm, who declined to be named.

Manuel, who steered South Africa's economy through its longest period of recorded growth, is loathed by powerful trade unions who saw him as a champion of business-friendly economic policies under former President Thabo Mbeki.

A government paper on the planning commission is under discussion in parliament and cabinet and if the paper is watered down, Manuel could resign, said Mike Davies, Middle East and Africa analyst at Eurasia Group.

"This will clearly unsettle market confidence as Manuel continues to be seen as a key balancing figure in Zuma's administration. However, it is unlikely that Manuel will back away from a fight easily."

Zuma, in office since May, has been under pressure from labour federation COSATU and the South African Communist Party (SACP) to move economic policy to the left to help the country's millions of poor.