The national minimum wage for adults is to be increased by 10 cent per hour from the beginning of January next year.
The new rate will be set at €10.20 per hour, following a decision of the Cabinet on Tuesday.
Minister for Social Protection Heather Humphreys said that more than 120,000 workers would benefit from the increase.
The proposal for the increase in the national minimum wage which was brought to the Cabinet by Ms Humphreys on Tuesday, was based on a recommendation submitted to the Government by the Low Pay Commission last month.
However, the Low Pay Commission’s recommendation on the increase in the national minum wage given to the Government by the came after trade union representatives walked out in protest at the proposed 10 cent increase.
Ms Humphreys said that since 2016, the national minimum wage had increased from €8.65 per hour to its current rate of €10.10.
“Today, Government approved a further increase to €10.20 which will come into effect on 1st January 2021. This will benefit 122,000 low-paid workers.
“I also want to ensure that the increase in the minimum wage does not result in employers having to pay a higher level of PRSI charge solely due to this increase. I will make regulations that will increase the employer PRSI threshold from €395 currently to €398 from 1st January 2021.”
The general secretary of the Irish Congress of Trade Unions (Ictu) Patricia King said at the time of the walk out from the Low Pay Commission last month that "we could not in conscience be party to any recommendation that did not afford the lowest paid workers in the Republic of Ireland an increase in excess of two per cent similar to other sectors in our economy".
About 340,000 staff across the public service received a two per cent pay rise at the start of October. Workers in the construction sector alsoreceived a 2.7 per cent pay increase in October .
Ms King said it had become clear to her and the other trade union representative on the Low Pay Commission, Gerry Light of the Mandate union, "that other members of the Commission were not prepared to propose an increase for 2021 beyond one per cent i.e. 10 cent".
A spokeswoman for the Department of Enterprise Trade and Employment said last month that it was “ disappointing that there was not consensus on this occasion” but there was a majority decision among members of the Low Pay Commission.
“ It has been some years since a unanimous decision was reached.”
The departure of the trade union representatives from the Low Pay Commission has generated uncertainty about the future of the body which was established by the the Government in 2015.
Ms Humphreys said: “The Low Pay Commission plays an important role in improving data collection on low paid and minimum wage workers and developing a strong research base on issues surrounding the minimum wage. I would like to thank the membership of the Commission for their work this year, as well as the work it has carried out since its foundation.”
