The national minimum wage will rise to £5.73 in October, Prime Minister Gordon Brown has announced.
It is currently set at £5.52. The minimum wage for 18 to 21-year olds, meanwhile will rise to £4.77 from £4.60, and the rate for 16 to 17-year olds will increase to £3.53 from £3.40.
John Cridland, deputy director-general at the Confederation of British Industry, said: “Over the last few years the Low Pay Commission has taken the right stance by not increasing the minimum wage by more than the growth in average earnings, whilst also taking into account the prevailing economic climate and firms’ ability to pay.
“At a time of considerable uncertainty for businesses and with economic growth already slowing, we welcome today’s moderate approach.”