South Africa on Monday raised the basic farm workers' wage by more than 50 percent after months of violent strikes in the country's scenic fruit- and wine-growing region.
The wage hike comes on the heels of hefty increases won in the mining sector after the industry was rocked by wildcat strikes which killed over 50 people.
Labour Minister Mildred Oliphant announced the new minimum daily wage will "be pegged at 105 rand ($11.77, 8.68 euro) per day" from March, rising from 69 rand ($7.74, 5.7 euro) per day.
"I would urge organised business and labour in the agricultural sector to use this opportunity to come together to find ways of improving labour relations in their sector," Oliphant said.
Organised agriculture warned the 52-percent hike will force job cuts in a sector that employs nearly 700,000 people.
"What's going to happen now is that with the increase of labour costs we will actually go to a point now where we will shed surplus labour on the farms," said Carl Opperman of Agri WesCape, the regional commercial farmers union.
Workers demanding over double their basic daily pay went on strike in November. The violence spread to several towns and killed three people.
The unrest in towns near Cape Town saw vineyards, property and vehicles torched and sparked several clashes with police firing rubber bullets at stone-hurling crowds.
Analyst Peter Attard Montalto of Japanese bank Nomura said the move could make a large number of farmers uncompetitive against imports.
"It also shows once again the direct link between violent strike action (this time around farms in the Western Cape in recent months) and capitulation by government," he said in email comments.
"Once again we worry that the success rate of violent protest action in achieving large wage increases (...) is sending a very bad signal that competitiveness can be easily sacrificed for a politically easy life," he added.
A wave of violent strikes hit South Africa last year, moving out of the platinum sector to gold and coal mines and forcing employers to agree to significant pay hikes.
The new wage regulations start March 1 and will increase by consumer inflation plus 1.5 percent over the following two years.
An independent report on the industry found the average wage on farms was around 85 rand and that if it increased to more than 105 rand, many farms would be unable to pay operating expenses.
It also found that a wage of 150 rand would not provide the nutritional needs of workers.
The Food and Allied Workers Union described the "unprecedented" hike as a "short-term victory" for the workers, adding they will continue the fight for a higher minimum wage.
The raise "is a meaningful step towards obtaining a living wage for farm workers," the union said.
"We will, however, fearlessly continue to push for higher wages in the sector, with the clarion call for a 150 rand per day minimum as our mandate."
Farmers had hoped for a maximum increase of 17 percent and said the 52 percent hike would see the sector's national labour bill go from around 13 billion rand to nearly 20 billion a year.
"So it's a massive increase that is going to come through and the South African agriculture with its profitability at the moment is going to suffer to see how they are actually going to absorb these costs," said Agri WesCape's Opperman.
Unskilled workers would be mostly affected by the job cuts, he said.
Farmers can apply for an exemption, if they can justify the claim.
"On the issue of job losses, for now, nobody has talked about it," said Oliphant, adding that the government had lay-off skills programmes.