An estimated one million workers on the minimum wage got a 20p per hour pay rise last week, good news but trade unions and economists said it was not enough.
Employees aged 21 and over will receive the small rise from £6.50 to £6.70 an hour.
The increase comes six months before the minimum wage is rebranded as the mandatory national living wage, which will give workers over 25 £7.20 an hour.
Economists at the Resolution Foundation think tank welcomed the boost in salaries but warned that the “conservative” rise would result in double as many workers living on the minimum wage by 2020 — one in seven employees in the private sector.
“Today’s 20p rise is relatively conservative given the strength of the labour market,” said foundation economic analyst Adam Corlett.
“It’s also important that businesses offer low-paid staff more opportunities for promotion and progression so that they don’t get stuck on the wage floor.
“The national living wage has injected fresh energy into the debate on tackling Britain’s chronic low pay problem, but further action will be needed to secure stronger wage growth throughout the workforce.”
Trade unions were also concerned about the true value of the pay rise. Tax credit cuts from April 2016 will cost over 3 million working families an average of £34 a week.
“Giving with one hand and taking more with the other is not the way to make work pay,” said TUC general secretary Frances O’Grady.
Pat Harrington of Solidarity commented: "Whilst raises in the minimum wage are welcome the Tory attempts to weaken Trade Unions and collective bargaining run in an opposite direction and will have a detrimental effect on living standards overall. The minimum wage is just a part of the picture and we need to look at what is happening to benefits, tax credits and collective bargaining to see whether workers will be better off overall."