A novel wage agreement for South African textile workers will lower salaries for new hires by 30 percent, in a bid to save the industry from cheaper Chinese competition.

The deal is being closely by watched by other industries in a nation where unemployment is mired around 25 percent. According to unofficial estimates, using a broader definition, it is as high as 40 percent.

President Jacob Zuma has promised to create five million jobs by 2020, and his government has already indicated that lower wages could be needed to reach that goal.

That's raised the hackles of his allies in the labour movement, who generally have sought to push for better conditions for workers who already have jobs -- which businesses say has discouraged creation of new ones.

Under the deal, the Southern African Clothing and Textile Workers' Union agreed that new hires will be paid a minimum 427 rands ($55, 43 euros) a week, about 30 percent less than current levels.

In exchange, employers have promised to create 5,000 new jobs within three years.

"This is not an unreasonable intervention, in a country like ours," said Andre Kriel, the union's secretary general.

Employers will not be allowed to sack existing workers in order to replace with lower-paid new hires, he said.

South Africa's textile industry is already battered, shedding half its jobs over the last decade.

Some textile mills have already moved to cheaper neighbouring countries like Lesotho, and others have threatened to follow suit, particularly in eastern KwaZulu-Natal province.

In that region, businesses already pay qualified workers as little as 200 rands a week, Kriel said.

But the industry is now in triage.

South Africa shed nearly 400,000 jobs last year, despite an economic boost from hosting the football World Cup.

For textiles, South Africa has already been swamped by cheaper Chinese imports, which accounted for 86 percent of the market in 2004, before quotas were scrapped.

South Africa's own clothing exports have tumbled, especially to the United States, dragged down by a strong rand and then the economic crisis in 2008.

Aside from the costs, South Africa has a problem with production capacity, which has dropped as businesses have folded.

South Africa's labour force also compares poorly with other countries. In the World Economic Forum's Global Competitiveness rankings, the country stands at 95th for labour efficiency.

The same report puts South Africa's labour hiring and firing practises as among the most rigid in the world, while putting labour-employer relations as among the worst on the planet.

"I'm still buying in South Africa, especially for the small quantities that I need for the next week or the next month," said Dudley Kaye from Duck Hook Marketing, which produces shirts, caps and bags as corporate gifts.

"But the people here are very unproductive and slow, the quality is not so good," he told AFP. "The Chinese products are cheaper, the quality is better and the embroidery technology is nicer."

He said the wage deal will help small businesses compete against imports, especially since the rand has weakened in recent weeks.

"It is unfortunate for the people, but half a loaf of bread is better than no bread."

Other industries have already urged their unions to follow suit, with the South African Chambers of Commerce and Industry hailing "the brave example" of the textile deal.

The National Employers Association of South Africa on Monday proposed lowering entry-level wages for metalworkers by 50 percent, noting that the industry lost nearly a quarter of its 450,000 jobs since the recession in 2009.

"There is a long way to go" before other industries adopt such a scheme, said labour analyst Andrew Levy.

"It is terribly low wages but it's better than unemployment."