Social care staff in Wales are set to receive the Real Living Wage, currently £9.90 an hour, the Welsh Government has said.
The Real Living Wage will apply to registered workers in care homes and domiciliary care, in both adults and children’s services.
The uplift will apply to personal assistants who provide care and support which is funded through a direct payment.
Welsh local authorities and health boards will be provided with £43 million to implement the Real living Wage from April, with workers feeling the benefit in the following months the Government said.
The Real Living Wage is independently calculated by the Resolution Foundation and overseen by the Living Wage Commission.
Julie Morgan, deputy minister for social services, said the measure was a long term commitment but that it would take "some time" to fully implement.
She said: "Social care continued to face considerable pressure. Throughout the pandemic we have all seen the vital contribution social care workers have made and continue to make, every single day to our health and social care system.
"This is an important first step towards improving employment terms and conditions for the sector.
"It is a long term commitment and will take some time to implement. We will need to ensure that we do this carefully and in a way that does not destabilise the sector.
"I look forward to working with all stakeholders, Social Care Fair Work Forum, Union, local governments and providers to take this forward."
Albert Heaney, chief social care officer for Wales, said the move would help address wider issues facing the sector.
He said: "Every social care worker should feel valued, rewarded and respected for the vital work they do and the valuable role they play in our communities.
"By introducing the Real Living Wage and working towards improving the terms and conditions, we are beginning to tackle some of the challenges facing the sector; in particular recruitment and retention."
The Welsh NHS Confederation welcomed the announcement, describing it as the "first major milestone" to a sustainable care sector.
Darren Hughes, director of the Welsh NHS Confederation, said: "We welcome the introduction of the Real Living Wage for social care workers from April 2022.
"The recognition, recruitment and retention of staff are a priority for the NHS and care providers and this announcement is the first major milestone on the journey to a long-term, sustainable future for the care sector.
"The NHS and social care systems are entirely reliant on our staff and issues of limited capacity and high levels of staff vacancies in social care have serious implications on the NHS’ ability to respond to demand and current pressures, including supporting the discharge of medically fit patients from hospital."
Trade unions also welcomed the measure, with both the UNISON Cymru and GMB Unions saying it was a positive move.
However, the GMB Union felt it did not go far enough.
Kelly Andrews, GMB Wales public services senior organiser, said: "This is a good first step.
"This increase will finally see many of our members in social care paid a wage they can live off, rather than having to live on the breadline.
"However, it doesn’t go far enough.
"GMB has been campaigning on behalf of our our social care members for fair pay and believe that [they] deserve at least £15 per hour, a rate that properly recognises their professional status and the incredibly demanding work they carry out.
"For too long this profession has been underpaid and undervalued, and it's high time we turn it into the kind of service we can be proud of; like our NHS.
"GMB will continue to work with Welsh government in improving the sector for everyone and creating a National Care service that Wales can be proud of."
The Welsh Conservatives said the increased pay was welcome but claimed that carers continue to miss out on higher terms.
Gareth Davies MS, the shadow social services minister, said: "While a pay increase for carers is much welcomed, it does still fall short of our call for a £10 minimum wage for them, meaning they are missing out on £200 a year.
"That is money carers could use for food, bills, or much needed respite.
"This is not a trivial amount and for the Labour Government not to meet that £10 per hour commitment feels more like a political, rather than financial decision.
"Let us also not forget that ministers have waited for several months to do this when they already had plenty of money to pay carers thanks to the record funding that has come to Wales from the UK Conservative Government."