The government has confirmed the minimum wage will be going up by $1.20 next year.

It's the next step towards the government's plan for the minimum wage to reach $20 by 2021.

Currently the minimum wage is $17.70, but this will increase from 1 April .

Workplace Relations and Safety Minister Iain Lees-Galloway said the new $18.90 rate will mean an extra $48 a week for those minimum wage earners who work 40 hours a week.

"The rise in minimum wage is estimated to boost wages by $306 million a year across the economy.

"That's a good investment in local economies where workers spend their wages," he said.

The Council of Trade Unions (CTU) president Richard Wagstaff was welcoming the move.

"We are thrilled that this government is taking active steps to improve the lives of working people by ensuring that the lowest paid are getting an increase from their employers," he said.

However, Wagstaff added there are other steps the government should take that would also make work better in New Zealand.

"These include the introduction of Fair Pay Agreements and enhanced protections for those working as contractors," he said.