The living wage will be increased to $20.20 per hour to help workers take on the growing cost of living.
It will rise by 40 cents from $19.80.
LISTEN ABOVE: Living Wage National Convener Annie Newman spoke with Mike Hosking
The voluntary rate, set by Living Wage Aotearoa New Zealand, comes into effect on July 1.
The living wage is defined as: "The income necessary to provide workers and their families with the basic necessities of life. A living wage will enable workers to live with dignity and to participate as active citizens in society."
Recent spikes in the cost of living are hitting low-income earners hard, with many workers struggling to provide for their families.
Living Wage National Convener Annie Newman said when wages go up the whole country benefits.
"The rate of $20.20 is important to ensure that New Zealand society is a healthy and thriving place for us to live in."
The wage increase is being welcomed by workers as well.
Fuifui Anae is a parking officer for the Wellington City Council and says the upping the wage will benefit families.
He has three children and said receiving the living wage has made his family's dreams a reality.
"It made goals more realistic rather than a dream. We bought our first home last year in June because of the living wage. We could set realistic goals."
Currently 64 accredited companies are committed to paying employees the living wage.
Mr Anae wants more companies to get on board.
"The Living Wage shows that they respect their employees and shows that they do value the work that they do."