An independent German commission voted to raise the minimum hourly wage from 8.50 to 8.84 euros (9.40-9.78 dollars) on Tuesday.
The vote in favour of the 34-cent increase was unanimous, said Jan Zilius, head of the minimum wage commission and former labour director of RWE, one of Germany's largest electricity utility companies.
The current minimum wage has been in place since 2015; the increase is due to go into effect next year.
"The increase is based retroactively on developments in pay deals," Zilius said.
Basing their calculations on an index of increases in the average hourly wage nationwide, the commission determined that minimum wage would have increased by at least 3.2 per cent to exactly 8.77 euros.
The commission, however, took into account a recent wage agreement that has not gone into effect yet.
The VdK interest group representing the socially disadvantaged said the increase was inadequate.
"The minimum wage needs to increase considerably to ensure that full-time employees earn enough to cover their living expenses and build an adequate pension beyond basic provision standards," VdK President Ulrike Mascher told dpa.
Stefan Koerzell, a German Trade Union Confederation (DGB) board member and member of the minimum wage commission, said: "From our perspective, the glass is a bit fuller than half-empty." Reinhard Goehner, who represented employers on the committee also expressed his satisfaction.
The commission, comprised of nine members representing both employers and employees, revisits the minimum wage rate every two years. The decision is supposed to be free of political influence.