Around 164,000 Kiwi workers will be better off from this Monday.
The minimum wage will increase by 75 cents to $16.50 an hour, a move Workplace Relations and Safety Minister Iain Lees-Galloway says is part of Labour's plan to improve wages and conditions for working New Zealanders.
"The rise in the minimum wage is estimated to inject $129 million into the economy through the wages of low income workers, circulating back into the economy because people on lower incomes are more likely to spend their wages on essential items like doctor's visits, keeping on top of bills, buying more healthy food - things that far too many Kiwis struggle to afford."
Mr Lees-Galloway believed the best time to raise the minimum wage is while the labour market is strong and tightening.
"Now is that time. Government forecasts unemployment will keep falling towards 4 percent over the next three years, while average wages will rise about 3 percent a year over that time due to a tight labour market."
Originally announcing the rise in December last year, Mr Lees-Galloway said the increase was part of Labour's aim to incrementally raise the minimum wage and spread the increases as evenly as possible each year.
With economic conditions in mind, Labour want to implement a $20 an hour minimum wage by 2021, he said.
"Raising the minimum wage is part of this Government's ambitious agenda to improve pay and conditions for Kiwi workers, and ensuring those on lower incomes get to share in our economic prosperity."