South Africa will increase the national minimum wage for this year by more than the rate of inflation and exceeding the expectations of businesses and analysts.

The hourly minimum will rise 5% to R30.23 from next month, the government said in a notice on Tuesday. That is more than the 4.7% average advance in wages analysts, businesses and labour unions expected for 2026, according to survey released by the Bureau for Economic Research on December 12.

Consumer prices rose an annual 3.6% in December, while the average for 2025 cooled to 3.2%, according to Statistics South Africa.

While the minimum wage was introduced in January 2019 to try and reduce the pay gap in one of the world’s most unequal societies, the latest increment won’t be enough to raise the living standards of a large part of the working population who spend the biggest proportion of their money on food. About the 32% of the people in the labour market are unemployed. When including discouraged job seekers, the rate expands to about 42%.

The economy of Africa’s most industrialised nation hasn’t grown by more than 1% annually for the past decade.

AgriSA, South Africa’s biggest farmers’ lobby group, said that the timing of the adjustment will put additional pressure on a sector already under strain.

“Agriculture is emerging from consecutive years of contraction caused by drought, climate volatility, and animal disease outbreaks,” it said in a statement. “While parts of the sector are showing recovery in 2025, this recovery remains fragile and uneven.”

The Congress of South African Trade Unions, the nation’s top labour federation, had tabled a slightly higher proposal.

The additional pay “will inject badly needed stimulus into the economy, spurring growth, sustaining and creating jobs,” Parliamentary Coordinator Matthew Parks said in a statement.