The national minimum wage is to rise by 30p – nearly 6% – from £5.05 to £5.35 an hour from October 2006, it was confirmed today.
The rate for workers aged 18-21 will rise by 20p to £4.45 an hour, while workers aged 16 and 17 will get a 30p rise to £3.30 an hour.
The increases will affect 1.3 million workers, and were recommended by the Low Pay Commission last year.
But the commission recommended that the national minimum wage should not increase ahead of national average earnings after this year.
Commenting on the announcement, CBI director-general, Sir Digby Jones, said: “The minimum wage jumped 12% between 2003 and 2005 – a rate of increase far in excess of average earnings growth. More and more companies are finding it difficult to absorb the rise so another 6% will be the last thing they need.
“But there will be relief at the commission’s conclusion that the minimum wage will have then reached an adequate level and that future increases above and beyond average earnings are no longer necessary.
“It is a sensible response to employer concerns that the minimum wage is starting to have a damaging impact on competitiveness.”