The Cabinet has welcomed proposals to increase the National Minimum Wage by 30c per hour from January 2018.
It follows a recommendation from the Low Pay Commission.
Around 120,000 workers will benefit from the increase, which will bring the minimum wage to €9.55.
In its report, the Low Pay Commission set out the range of data it considered in recommending the increase, including risks to the economy and international comparative research.
The Commission also sought submissions from interested parties and consulted directly with workers and employers in relevant economic sectors.
Figures from the Central Statistics Office last April showed 10.1% of employees earned the National Minimum Wage or less last year.
Commenting on the increase, Taoiseach Leo Varadkar said: "The Government welcomes the recommendation from the Low Pay Commission to increase the national minimum wage by 30c to €9.55 per hour.
"It would work out as a €12 increase in a full 40 hour week. This would be a modest increase but it's ahead of the rate of inflation and average increases in earnings.
"It would be the fourth increase in the minimum wage since 2011, and the second under this Government, and a further step towards the Programme for Government commitment for a minimum wage of €10.50."
Labour spokesperson on Workers' Rights Senator Ged Nash said the increase is "a welcome but very small step in the right direction".
Separately, Families who employee au pairs in their homes should be entitled to deduct €21.85 per week from the minimum wage for accommodation, according to recommendations by the commission.
The report recommends a deduction for meals of 82 cent per hour worked.
The Commission also recommends that the allowances should be reviewed annually in conjunction with the review of the national minimum wage.
In September 2016, the Government asked the commission to review the allowances for board and lodgings under the National Minimum Wage Act, and to recommend new rates.
The current system of board and lodging allowances was introduced as part of the National Minimum Wage Act, 2000.
If an employee receives food (known as board) and/or accommodation (known as lodgings) from an employer, this may be taken into account in calculating the minimum wage.