A 20p raise in the adult minimum wage to £6.70 an hour has been recommended by the Low Pay Commission, the independent body that advises the government on the hourly rate.
The above-inflation hike, which could be adopted by October 2015, represents a 3% increase on the current level of £6.50 an hour.
The recommended rate is 30p below the £7 an hour informally backed by the Chancellor George Osborne last year and more than £1 below the £8 an hour rate Labour has signaled it would raise it to by 2020.
Alongside the adult increase, it has been recommended that the youth rate should increase by 3.3% to £5.30 an hour for 18 to 20-year-olds, by 2.2% to £3.87 for 16 to 17-year-olds and by 2.5% to £2.80 for apprentices.
In January, retailers and business groups expressed concern to Drapers about the strain an above-inflation rise in the national minimum wage could place on employers and jobs.
At the time deputy chief executive officer of the British Independent Retailers Association, Michael Weedon, said any rise above the earning growth of businesses could threaten jobs. He recommended a rise of no more than 1%.
However, commenting on the announcement, deputy director-general of the CBI Katja Hall, said:
“The LPC has struck a careful balance. As the economic recovery cements, the commission has reconciled a desire to reflect this in pay packets while recognising that productivity growth – the key to sustainable pay rises – remains weak.
“We welcome the commitment to review next year’s rise if the improved business environment doesn’t materialise.
“The National Minimum Wage has been one of the most successful policies of our time thanks to the independent recommendations of the Commission, helping many low-paid workers without damaging their job prospects.
“Any artificial increase due to political expediency will help no-one and ultimately damage one of the most successful government policies in recent years.”