Taoiseach Leo Varadkar said the decision to increase the minimum wage by 30c an hour would benefit up to 150,000 workers. Only those on full hours will earn up to an extra €12 a week.
This will bring the minimum wage to €9.55 an hour.
Mr Varadkar, flanked by his Independent Alliance colleague, Disabilities Minister Finian McGrath, said the increase would benefit those who get up early, work nights as well as weekends.
The Fine Gael-Independent coalition sanctioned a minimum wage increase of just 10c last year, a rise derided by many opposition parties and trade unions.
Mr Varadkar said this new increase, which will come into effect in January, was equal to a 3.2% increase for those workers, a rise above inflation.
Retail Ireland, the Ibec group that represents the retail sector, expressed concern at the Low Pay Commission recommendation to increase the wage, which led to the Cabinet’s decision.
Retail Ireland director Thomas Burke said: “With little to no inflation in consumer goods and growing concern over the impact Brexit is already having on the retail sector, there is absolutely no economic basis for a further increase to minimum wages.”
Rising costs are threatening the viability of retail businesses in Ireland and in turn jeopardising thousands of jobs in the sector, said Mr Burke.
Small firms took issue with the increase. Linda Barry, acting director of the Small Firms Association, said: “Two-thirds of SFA members plan to give pay rises this year, but increases will be based on the performance of the individual worker and the ability of the business to pay.”
Trade union Unite welcomed the rise, but said the €9.55 rate was €2 short of the living wage, calculated at €11.70 an hour.
Labour’s Ged Nash was critical of the Government, saying it was making extremely hard work of its pledge to increase the minimum wage to €10.50 an hour.
“With a miserly 10c increase last year and a modest 30c recommended for next year, the Fine Gael-Independent Alliance government is making extremely heavy weather of their pledge to hike the minimum wage rate to €10.50 per hour,” said Mr Nash.
“According to the CSO, there are around 130,000 workers on the national minimum wage. If the Government is serious about reaching its own published target, then they need to work closely with the Low Pay Commission to develop a road map to €10.50, which in itself is €1.20 short of a living wage which now stands at €11.70 per hour.”