The Government has announced plans to raise the National Minimum Wage by just over 1 per cent this year to £5.80 an hour - a move dubbed appropriate for the current economic climate.
Adults on minimum wage will see their hourly rate increase by 7p from October 1 while the Youth Development Rate will rise from £4.77 to £4.83 an hour and the rate for 16 and 17-year-olds will go up 4p to £3.57 an hour.
George Bain, chairman of the Low Pay Commission, said: "These are very challenging times for the UK and unprecedented economic circumstances for the minimum wage. We believe that the Low Pay Commission`s recommendations are appropriate for this economic climate. They reflect the need to protect low-paid workers` jobs as well as their earnings."
The CBI said the moderate increase recognised that many businesses were struggling and would help protect jobs.
"The inflation-busting rise some unions had called for would have hit firms hard and put many lower paid workers on the dole," said deputy director-general John Cridland.
"Over the past decade, the minimum wage has risen faster than average earnings and inflation, and a sensible, cautious approach now will help ensure this landmark piece of legislation continues to improve the lives of low paid workers for many years to come.”
Last year the adult rate rose by 21p on the previous year to the current rate of £5.73 and in 2007 it went up 17p to £5.52.