Sheffield Council to introduce living wage from 2013
Workers employed by Sheffield City Council will receive the living wage from January 2013.
The salaries of 275 employees will increase from £6.33 to at least £7.20 an hour, the authority said.
Union GMB welcomed the plan but said thousands of workers employed by private companies would miss out.
The Labour-run authority said it would encourage companies it worked with across the city to adopt a living wage policy.
It said it would meet the costs of the policy through savings made by cutting senior management positions.
Sheffield is one of several Labour-run authorities to adopt the policy.
Labour leader Ed Miliband has said if the party wins the next election it will introduce rules forcing government contracts to only be given to those firms who pay the living wage.
The government said it backed companies paying a living wage and would encourage more businesses to do so, but said restricting government contracts in this way could be illegal.
In Sheffield, the policy will not affect about 2,400 low-paid workers employed by firms contracted by the council.
Peter Davies, from the GMB union in Sheffield, said: "We would like to see the council go further.
"Millions of pounds is paid out to companies in this city who work with the council and that is where the majority of low-paid workers are."
Julie Dore, leader of Sheffield City Council, said: "We will be mounting a campaign across Sheffield for all employers to adopt a living wage.
"What we can do is when we are procuring or sub-contracting out further contracts in future... to look at whether we can make the living wage part of the criteria."
The plans will be debated at a full council meeting on Wednesday.