The minimum wage will increase to $17.70 an hour in April next year, an increase of $1.20 an hour.
Workplace Relations and Safety Minister Iain Lees-Galloway said the increase would benefit about 209,200 workers.
It would lift wages throughout the economy by $231 million a year, he said.
"About a quarter of those earning the minimum wage - 36,000 people - are parents."
Mr Lees-Galloway said the increase, from 1 April 2019, would mean an extra $48 a week before tax for a full-time worker.
The starting-out and training wages will increase from $13.20 to $14.16 per hour from 1 April 2019, in order to stay at 80 per cent of the adult minimum wage.
The government also announced its planned minimum wage increases for the following two years, as it moves towards a goal of an $20 an hour minimum wage by 2021.
"To provide businesses and workers with greater certainty, I am indicating minimum wage rates of $18.90 to come into effect on 1 April 2020 and $20.00 to come into effect on 1 April 2021.
"These indicative rates are subject to each year's annual review, in accordance with the statutory process, which will take into account the economic conditions at the time."
The government consulted with employer and worker representatives, including Business New Zealand and the CTU, and was told they wanted certainty on how the 2021 target would be reached, Mr Lees-Galloway said.
New Zealand First's Clayton Mitchell said raising the minimum wage was one part of the government's approach to lift the wellbeing of all New Zealanders, and was a key part of the coalition agreement.