The National Living Wage is set to rise to over £11 an hour from April next year, the Chancellor has confirmed.
Jeremy Hunt told the Conservative Party conference that over two million people were expected to benefit from the increase, which will see their annual earnings rise by over £1,000.
The National Living Wage, which is currently set at £10.42 an hour, is the lowest amount workers aged 23 and over can be paid per hour by law.
The government said the change would see the National Living Wage rise to two-thirds of average earnings.
Minimum wage rates are decided each year by the government based on advice from independent advisory group, the Low Pay Commission.
A government announcement said the increase would mean a full-time worker on the National Living Wage would be "over £9,000 better off than they would have been in 2010".
However, Michael Kill, chief executive of the Night Time Industries Association (NTIA), said the news was a "slap in the face" for businesses already struggling with rising costs.
"The night-time economy has been battered by the pandemic, with our venues facing closures, restrictions, and crippling financial losses," said Kill.
"Now, just as we're trying to get back on our feet, the Chancellor decides to unload the burden of a wage increase squarely onto the shoulders of operators."
He added: "While we support fair wages, the timing couldn't be worse. It's a cynical attempt to score political points at our expense."