The national minimum wage for adults 21 and over will increase by 19p to £6.50 per hour from October this year.
Around a million workers are estimated to benefit from the 3% pay rise, which was recommended to Business Secretary Vince Cable by the Low Pay Commission.
This is the first time in six years that the increase will be above inflation, which currently stands at 1.9%.
Mr Cable said:
“The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008.”
The rate for 18 to 20-year-olds will go up by 10p to £5.13 an hour, a 2% increase.
The rate for those aged 16 and 17 will go up by 7p to £3.79, also a 2% increase.
Apprentices will earn an extra 5p an hour, taking their wages to at least £2.73.
Despite this increase, Sir George Bain – the man who first introduced the minimum wage 15 years ago – said that many companies could afford to pay their staff more.
Sir Bain told BBC Newsnight:
“If you set it at the ‘living wage’, which is about £7.65 an hour, you would cause massive unemployment in areas like retail and social care, but there’s only about five sectors where this is true. There’s a whole range of sectors where you could easily afford to pay more than the minimum wage.”
Photo by J D Mack