Edward Davey, minister for employment relations, says: ‘The increases to the National Minimum Wage this year are appropriate for the economic climate. They will strike a balance between helping the lowest paid whilst at the same time not jeopardising their employment.

‘Workers on the National Minimum Wage are disproportionately likely to be employed by small firms and so it is right the Low Pay Commission considers their competitiveness when they make their recommendations for next year. SMEs will be vital to our economic recovery.’

However, Adam Marshall, director of policy and external affairs at the British Chambers of Commerce, warns the new apprentice minimum wage could prevent businesses from hiring staff.

He says: ‘An hourly minimum wage, as opposed to a weekly wage, has the potential to be quite complex to administer. Guidance must be simple, otherwise the apprenticeships the UK desperately needs to reduce youth unemployment may not be created.’

Younger workers between the ages of 18-20 will see a 9p increase to £4.92 an hour, while 16 and 17 year-olds will get £3.64 an hour, an increase of 7p.

But all the rises fall short of inflation, which was 3.4 per cent in May.