National minimum wage will increase to £6.70 an hour from October, after the government formally accepted the Low Pay Commission’s recommendation.
The above-inflation hike, which will apply to all adults, the equivalent of 1.4 million workers aged 21 and over, represents a 3% increase on the current level.
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 given the heavy burden of other costs, such as business rates.
The government has also today increased the rate paid to employees aged 18-20 by 3% to £5.30, while the rate paid to 16-18 year olds will go up 2% to £3.87.
It went further than the LPC’s recommendation to boost the hourly amount given to apprentices by 7p, increasing it by 57p - or 20% - to £3.30.
Delivering the news, Prime Minister David Cameron said the minimum wage increases would offer “more financial security” to workers, and “a better future” for Britain.
However, Labour said minimum wage had been “eroded” under the coalition and reiterated its pledge to increase the adult rate to £8 an hour over the course of the next parliament if it wins the election in May.
CBI director-general John Cridland said the decision to accept the LPC’s recommendations on the adult and youth rates was “postive”, but said: “The National Minimum Wage has been one of the most successful policies of recent years thanks to the independence of the Commission – its politicisation is worrying.”
The Low Pay Commission, which comprises business and union representatives and academics, made the official recommendation last month.
At the start of the year, retailers and business groups Drapers spoke to warned an above-inflation rise in the national minimum wage risks placing a strain on employers and jobs.