The national minimum wage is to be increased by 19p an hour to £6.50 (an increase of 3%) the government has announced.
The new rates will come into place in October. This is the first time in six years that an increase in minimum wage has been higher than the rate of inflation which is currently 1.9%.
The rate for 18-20 year olds is to be increased by 10p an hour to £5.13 while the rate for 16 and 17 year olds will rise by 7p an hour to £3.79.
The minimum wage rates for apprentices will rise by an extra 5p an hour, bringing their wages to £2.73.
The rise to £6.50 is expected to be one of several above-inflation rises following a treasury report which said wages should be restored to pre-crisis levels.
Chancellor George Osborne says that ultimately he wants to raise the minimum wage to £7 an hour.
Such a rise would be a step towards a working wage which is about £8.80 in London, and £7.65 for the rest of the country.
Professor Sir George Bain, founding chair of the Low Pay Commission spoke with BBC Newsnight and said that the minimum wage had become a “blunt instrument” and that many employers could afford to pay their workers much more.
He added that if minimum wage was to be set at a living wage, there would be massive unemployment in some sectors such as retail and social care.
However he went on to say that this would only be the case for a few sectors, and many others could easily afford to pay more than the minimum wage.
Sir George also said there should be a “special case for London to have a higher national minimum”.
A higher minimum wage is good news for families who are struggling with the rising cost of living.
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