The award falls short of a 25 per cent increase childcare workers were seeking and will be paid for from funds set aside in the budget announced in May.
A $3.6 billion boost to the sector, announced by the federal government on Thursday, will mean early childhood educators get paid 10 per cent more from December, with a further five per cent increase from December 2025.
For early childhood workers to receive the pay rise, centres will be barred from increasing fees for parents by more than 4.4 per cent over the next year.
Prime Minister Anthony Albanese said the pay rise reflected the proper value of educators in childcare, who are overwhelmingly women.
"Knowing your child is safe, happy and learning alongside their friends is priceless. Giving the next generation the best start in life is essential," he said.
"Today, we deliver fair pay for the people who make this possible."
Anthony Albanese and Jason Clare say the pay rise will boost the childcare industry. (Lukas Coch/AAP PHOTOS)
Early childhood workers on the average wage will receive a pay rise of $103 a week from December, rising to $155 more per week following the December 2025 increase.
Education Minister Jason Clare said the pay rise would help to boost the number of workers in the industry.
"This is the cost-of-living double whammy – wages up for workers and keeping prices down for families," he said.
"A pay rise for every early childhood educator is good for our workforce, good for families and good our economy."
The government has confirmed it received the final report from the Productivity Commission into early childhood, which is due to be released publicly in coming weeks.
A draft report from the commission released in November recommended for the government provide universal access to childcare for up to 30 hours a week for all children aged up to five-years-old.
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