The German cabinet Wednesday adopted draft legislation establishing a fixed national minimum wage of 8.50 euros ($11.70) to be phased in from 2015 and fully in place from 2017.
"It's done," a government source told AFP following a cabinet meeting.
A fixed minimum wage was the carrot which conservative Chancellor Angela Merkel dangled in front of centre-left Social Democrats (SPD) to woo them into a coalition that won her a third term in power.
The measure must now go before the lower house of parliament, or Bundestag, where the coalition has an overwhelming majority.
The labour ministry has yet to determine whether the measure would require approval from the upper house, or Bundesrat, as well.
But in both cases, it is expected to go through with no resistance.
The minimum wage will come into effect on January 1, 2015, but there will be a period of transition for those sectors where existing wage agreements are still valid.
Nevertheless, from 2017, it will apply to everyone, except under-18 year olds, apprentices and the long-term jobless during the first six months after finding new employment.
In a country which has traditionally been happy to let unions and management negotiate pay between themselves, the advent of a fixed minimum wage marks a mini revolution.