NHS staff, teachers and public sector workers in Wales will receive pay rises of between five and six per cent.
The announcement comes as the Welsh Government has accepted the pay recommendations from independent pay review bodies.
Teachers will receive a 5.5 per cent pay award.
NHS staff on Agenda for Change terms and conditions will receive a 5.5 per cent pay award.
Doctors and dentists, including GPs and salaried GPs, will receive a 6 per cent pay award, with an additional £1,000 for junior doctors.
The Welsh Government has also agreed up to an average 5 per cent pay award for civil servants and for staff at a number of other public bodies, including Natural Resources Wales and the Development Bank of Wales.
First Minister Eluned Morgan said: "People across Wales have told us over the summer that public sector workers are the backbone of the services we all rely on – from the nurses in our NHS to teachers in classrooms across Wales.
"They want them to be fairly rewarded for the vital work they do. These pay awards reflect how we value them and respect their hard work.
"But the public has also been clear they want to see improvements in public services – especially in the NHS and education. We will work with these services to deliver on what people have told us over the summer listening exercise.
Cabinet Secretary for Finance Rebecca Evans said: "We greatly value the hundreds of thousands of people working across the public sector in Wales and the work they do every day. We have worked hard to be able to make this offer.
"We are committed to working in social partnership with trade unions to achieve fair pay settlements which are affordable while also recognising the huge contribution made by public sector workers."
Independent pay review bodies make recommendations to governments about pay. Other parts of the public sector in Wales, including local government staff, fire and rescue services and social care, are not covered by the independent pay review bodies and are negotiated through a separate process.
Reacting to the announcement, Tom Hoyles, Senior Organiser from the GMB union, said: “To see First Minister Eluned prioritising a pay deal for public services so early in her tenure is a great sign.
“The only way to get our economy growing is to put money in working peoples pockets.”