The Low Pay Commission, the independent body that advises the Government on pay, has recommended a 20p increase to the minimum wage taking it to £6.70 an hour.
The new adult minimum wage could be adopted by October 2015 and would represent a 3% increase on the current rate.
LPC chair David Norgrove said: “Sharp increases in the minimum wage would put jobs at risk – not least bearing in mind pressure on low-paying sectors and small firms. We do believe, however, that the continued recovery, and in particular the impressive growth in employment of the low paid, should this year allow a further increase in the real and relative value of the minimum wage.
“An increase of 3% to £6.70 is a larger real terms increase than last year and, on the basis of the most recent Bank of England inflation forecast, should restore three quarters of the fall in the real value of the National Minimum Wage relative to its peak in 2007.”
News of the recommended increase in minimum wage comes in the same month David Cameron told the British Chambers of Commerce annual conference that it is time to “give Britain a pay rise” because business conditions “have not been this good for a long time”.
Cameron’s calls for a pay rise split retailers with some saying they had already pre-empted the Prime Minister with inflation busting pay rises, while others pointed out high business rates made it hard to give staff pay increases.