Germany's cabinet gave the green light on Wednesday to a national minimum wage of 8.50 euros per hour in Europe's biggest economy - a flagship project for the Social Democrats (SPD) who share power with Angela Merkel's conservatives.
The minimum wage is due to apply from 2015 but will not cover minors, trainees and some interns. Some employers can continue to pay their workers less until the end of 2016 if they are covered by certain collective agreements.
In addition, companies will also be able to pay the long-term unemployed less than the legal minimum wage for the first six months of a new job.
"The minimum wage is coming," SPD Labour Minister Andrea Nahles said at a news conference in Berlin.
"It is, above all, good news for people who work hard but get such low wages that they can't live from them so I hope that with this pay package we will create more wage justice and that's good for cohesion in Germany overall," she added.
The minister has reassured branches where seasonal work is common such as agriculture, hotels and restaurants, by offering support to help them adjust to the minimum wage.
The Bundestag lower house of parliament is due to debate the law in June before passing it in July. The Bundesrat upper house is due to wave it through after the summer break.
Employer lobbies have denounced the plan, saying it would cost jobs and introduce too much regulation.
Slightly more than a tenth of workers in western Germany earn less than the proposed 8.50 euros an hour, compared with a quarter of workers in eastern Germany, according to data from the IWH institute.
(Reporting by Michelle Martin; Editing by Madeline Chambers)