Unions are welcoming a timetable to get the minimum wage up to $20 by 2021.

The government yesterday announced the rate will rise from $16.50 an hour to $17.70 on April 1, and then to $18.90 the following year.

It will mean a rise of at least $48 a week in the pay packets of more than 200,000 New Zealanders.

The increase was part of the coalition agreement between Labour and New Zealand First.

Council of Trade Unions president Richard Wagstaff says it’s welcomed the news as working people struggle to pay for Christmas.

It should also have a positive knock on effect on the economy.

"I think we can afford it. New Zealand's got very low unemployment right now and this is just what we need because we know working people spend their money in the local community so this is good news for small businesses, it's good news for retail, it's good news across the board. That money will get out there, will circulate around and everyone will benefit in the long run," Mr Wagstaff says.

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