The national minimum wage for adults increases by 12p an hour to £6.31 from today, while unions claim a "far bigger increase is needed".
The Low Pay Commission, an independent agency, recommended the increase in early 2013 from the previous level of £6.19 an hour.
The minimum wage for 18-to-20-year-olds is increasing by 5p to £5.03 an hour, while for 16-to-17-year olds the rate increases by 4p to £3.72.
The BBC reported that unions are calling for a bigger rise. The TUC general secretary Frances O’Grady said a “far bigger increase” is needed. The UK’s lowest-paid workers are now facing an historic living standards crisis,” she said.
Think tank The Resolution Foundation, which focuses on standards of living, said that the minimum wage was falling, despite the increase, because of the pace of inflation.
The evidence shows that relatively, wages are falling compared with inflation.
Even though inflation, measured by the consumer prices index, fell to 2.7% in in August, from 2.8% in July, this means prices are still rising faster than wages, which rose by 1.0% on average over the same period.
Business secretary Vince Cable said he would ask the Low Pay Commission to “look at what economic conditions would be needed to allow the national minimum wage to rise in the future by more than current conditions allow”.
The Low Pay Commission is an independent body that advises the government on the national minimum wage each year.
The Living Wage Foundation argues that companies should pay £7.45 an hour in the UK as a whole, and £8.55 in London.
Tackling a minimum wage while keeping business competitive will be a key challenge for politicians leading up to the 2015 general election.
Commenting on Labour leader Ed Miliband’s party conference speech last week, Alex Jackman, head of policy at the Forum of Private Business, said that his speech “sought to provide solutions to the rising cost of living as well as the rising costs of doing business. The difficulty will be in policy areas where those conflict. The National Minimum Wage is an example of this.”