The minimum wage is to rise from £5.35 to £5.52 an hour from October, Government announced today.
For 18 to 21 year-olds, the level will rise from £4.45 to £4.60. Minimum wage for 16 and 17 year-olds will increase from £3.30 to £3.40.
The announcement means minimum wage will have increased by almost 30% more than inflation since it was first introduced in 1999.
Federation of Licensed Victuallers Associations chief executive Tony Payne said news of the increase means licensees face a "double whammy" of cost hikes in October, when the minimum holiday entitlement for workers increases from 20 to 24 days a year.
"Small businesses, once again, are going to be the ones that are effected," Payne said.
"They are hitting small businesses, which are finding it difficult as it is. We have a lot of pubs closing down because of the costs of running a business."
We have a lot of pubs closing down because of the costs of running a businessFederation of Licensed Victuallers Associations chief executive Tony Payne.
New levels follow advice from the independent Low Pay Commission.
Secretary of State for Trade and Industry, Alistair Darling, said: "More than a million workers, two thirds of them low paid women will benefit from this announcement.
"It means the minimum wage has gone up by almost 30% more than inflation since 1999, with the number of jobs in the economy increasing by almost 2m in the same period. It is right for workers and employers.
"Just 10 years ago home workers could be paid as little as 35p an hour, cleaners £1.30 an hour and security guards £2.25 an hour. It's bad for families and just plain wrong.
"I am proud of the minimum wage, proud of how it is helping families and proud of the role it plays in the modern economy we are delivering."
British Beer and Pub Association director of communications Mark Hastings said: "What is clear is that the Low Pay Commission has listened carefully to businesses - this increase is in line with inflation."