The national minimum wage will rise by 3%, the Government announced this morning.

From October 1 the hourly wage will increase from £6.50 to £6.70 for employees aged 21 and over. The the rise of 20p is predicted to affect 1.4 million workers and is  the largest increase in seven years for adult workers. The decision has been criticised by trade associations who argue that the increase will have a negative effect on staffing and business investment.

“We fear this decision will lead to an escalation in retailers who can no longer afford the running costs of their shop resulting in their staff having their hours cut or even losing their jobs,” said NFRN national president Martyn Brown.

ACS chief executive, James Lowman added: “We are disappointed with the increase in the National Minimum Wage above inflation, above average earnings growth, and above public sector pay award levels. Our research has clearly shown that retailers have little choice but to reduce staff hours and delay further business investment when the minimum wage is increased.”

The hourly youth wage (18-20-year-olds) has increased by 7p to £5.30 and 16-17-year-olds has increased to £3.87 from £3.79.