The National Minimum Wage (NMW) has risen to a new adult rate of £5.35 per hour as of 1 October.
The increase from £5.05 to £5.35 per hour will benefit about 1.3 million workers, the government said.
The youth rate, paid to 18-21 year-olds, will go up from £4.25 per hour to £4.45. The rate for 16-17-year-olds will increase from £3.00 an hour to £3.30 per hour.
Business groups have long argued that continued rises in the minimum rate would lead to job losses, particularly in the retail sector. However, these concerns have been dismissed by the unions and government.
Trade and industry secretary Alistair Darling said: “Before the National Minimum Wage was introduced, wages of as little as £1.20 per hour were common and legal. It is only right that we continue to help those who get paid the least.”
When the NMW was launched in 1999 the main rate was £3.60 per hour and the 18- to 21-year-old rate was £3.00 per hour. Since then an estimated one million workers per year have benefited from the raised rates.