Cabinet has approved an 80c increase in the national minimum wage.
The rate will be €11.30 an hour from January 2023.
Trade unions say the increase is "inadequate" as inflation over the past couple of months is at more than 8% and this increase only represents 7%.
It is part of a move towards a living wage by 2026 - which will be set at 60% of the median income in Ireland.
Tánaiste Leo Varadkar confirming Cabinet has approved an 80c increase in the minimum wage effective Jan 2023. Will be about €1,600 a year for those on 39 hours a week. At least 170k people will benefit, he says pic.twitter.com/PkNZHhHoHX
— Seán Defoe (@SeanDefoe) September 14, 2022
Tánaiste Leo Varadkar said the minimum wage increase will be part of a package of support for low earners in the budget.
"That works out at an extra €31 a week, an extra €120 a month, or more than an extra €1,600 a year.
"So we hope that this increase - which is the largest single increase in the minimum wage since it was invented - will go in some way to help those on low pay with the rising cost of living", he said.
Earlier the CEO of ISME, Neil McDonnell, said this was not the way to fix the cost of living crisis.
"Increasing wages, increasing the minimum wage, isn't the solution to a cost of living crisis.
"Employers are not going to be able to bridge this gap".