UPDATED 6.43PM The minimum wage has received a surprise 50 cent increase, to $15.25 an hour as of April 1st.

Most pundits expected it to be raised 25 cents, more in line with the rate of inflation.

Workplace Relations Minister Michael Woodhouse said the increase will benefit almost 153 thousand workers, and increase wages throughout the economy by $75 million per year.

Mr Woodhouse said the lowest paid workers will feel the difference.

"It's a thousand dollars a year before tax income for the person who is on the minimum wage, so its certainly going to mean a lot to them I think."

Mr Woodhouse said the aim is to put more money in workers' pockets, without overloading businesses with higher costs.

"We did need to be mindful of the cost on business and the fact that their's no doubt that wages affect the number of jobs and the economy."

But Council of Trade Unions president Richard Wagstaff said the minimum wage needs to be something you can live on - not just exist on.

He said an increase of 50 cents is still nowhere near enough to take your family to the doctor, buy nutritious groceries or replace your washing machine if it breaks down.

Labour Leader Andrew Little said the rise is minuscule, and isn't a livable income for anyone or any household.

"So I don't accept that $15.25 is an acceptable minimum wage, it has to be more."

The living wage was also confirmed to be increasing today.

The wage would increase by 55 cents per hour to $19.80 an hour, to come into effect from July 1st.

Living Wage spokesman Paul Barber said it's a fantastic announcement.

"We're actually seeing people's wages being held at a level that allows them to continue to participate in society."

But Richard Wagstaff said the gap between the living and miniumum wages is still there.

"Really these very small, incremental changes to the minimum wage doesn't address the fundamental policy problem.

"The minimum wage needs a real boost," he said.

There are currently 46 employers signed up to pay the Living Wage.