The rate, announced by the cabinet on Monday to take effect in 2015, translates into a gross monthly salary of 3,640 francs based on a 42-hour work week.
The decision comes almost two years after Neuchâtel citizens voted to accept the principle of a minimum wage in the cantonal constitution but has still to be considered by the cantonal parliament.
It also comes after a commission with representation from unions, businesses and the canton’s political parties worked to develop solutions for the minimum wage question.
One of the restraints is a federal law that requires that a minimum wage be considered as a social benefit, while the government said it was also conscious of the needs for Neuchâtel to be competitive on an industrial basis.
The rate announced is in line with minimum revenues from federal social programmes, the government said in a news release.
The minimum wage would actually impact only three percent of jobs and four percent of workers in the canton but would be inscribed as a base for future collective agreements, the release said.
The government said the rate of 20 francs an hour would raise the pay of 2,700 people in the canton.
It said the minimum wage would have little impact on the canton’s export sector (watch making is one of the canton’s major businesses) because it already pays wages above that rate.
Wages in Switzerland are among the highest in the world, although the cost of living is also elevated.
(As a basis for comparison, the minimum federal wage in the US is just $7.25 an hour, with the highest state minimum wage set at $9.19 an hour in Washington).
The cantons of Valais and Ticino are expected to follow suit with minimum wages, although voters have rejected similar proposals in Geneva and Vaud.
However, Swiss citizens will vote next year on a national initiative calling for a minimum monthly salary of 4,000 francs.