Portugal's government is raising the country's minimum monthly wage to 505 euros ($645) from 485 euros, though that is still the lowest in Western Europe.

The decision came Wednesday after weeks of negotiations with business leaders and trade unions.

Portugal's minimum monthly wage, which is subject to income tax of 14.5 percent, is earned by more than 600,000 mostly blue-collar workers. Many of them are farm laborers or work in cafes, bars, restaurants and hotels.

In the European Union, only countries in Central and Eastern Europe have a lower minimum wage.

To ease the financial burden on companies, which said the hike would discourage hiring, the government lowered companies' social security contributions on workers' wages to 23 percent from 23.75.