The national minimum wage is to rise from £6.31 to £6.50 an hour.
Business secretary Vince Cable stated today, he had accepted the recommendation by the low pay commission for an increase in the minimum wage by 3%.
The rate for 18-20 year olds will also increase by 10p to £5.13 and hour while 16 and 17 year olds will now receive £3.79 an hour, up by 7p.
In a statement, Mr Cable said, “The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008,”.
He also urged businesses to share the benefits of an improving UK economy with workers.
Despite the increase, the national minimum wage is still lower than the living wage which is currently £8.80 and hour for London and £7.65 for the rest of the country.
The move to increase the minimum wage is seen as a lead up to it eventually reaching £7 an hour by 2015, a proposal that has been backed by Chancellor George Osbourne.