Nicola Sturgeon said her government will not “press down on pay” for workers amid the cost-of-living crisis.
Ms Sturgeon intervened in the pay dispute between Cosla and unions last week, which saw an increase accepted, resulting in a wage bump of £2,000 for the lowest paid workers.
Further strikes from refuse workers were called off following the agreement and school strikes were cancelled.
Our job in the midst of a cost crisis is not to press down on pay. Our job is to boost it with every penny we can lay our hands on
In her speech to MSPs, Ms Sturgeon said she did not “begrudge a penny” of the additional funds, despite having to move resources away from other portfolios.
Deputy First Minister John Swinney is expected to outline the “tough decisions” to parliament later this week.
Ms Sturgeon said: “Paying higher wages is the biggest contribution we can make to helping families with soaring costs.
“When we intervened in the local government dispute, we did so to help shift funding from the highest to the lowest paid and secure the best possible increases overall.
“It was the right thing to do.”
And she said criticism of workers and unions fighting for a pay increase is “deeply misplaced” – in a dig at UK ministers who have not intervened in pay disputes.
She added: “That is why, to the Tories, threatening to row back on protections for workers and resist the right to strike, and to Labour, who last month voted at Cosla to block a bigger pay rise for council workers, I say this:
“Our job in the midst of a cost crisis is not to press down on pay. Our job is to boost it with every penny we can lay our hands on.”
Scottish Conservative leader Douglas Ross said he “supports” the increase to reward low paid council workers.
But he criticised the length of time it took for the Scottish Government to resolve the issue.
In a back and forth with Deputy First Minister John Swinney, he said: “I just put on record, given the mess that had been made of Glasgow, of Edinburgh, of towns and cities across Scotland: the first minister finally found time in her busy schedule to get involved and get around the table.
“It should have happened weeks ago. If she’d had less appearances at the Fringe, she might’ve been able to get a resolution far earlier.”
Mr Ross added: “We support rewarding our public service workers, our council workers – some of the lowest paid anywhere in the country, who had to go on strike because they were being abandoned by this SNP Government.”