The national minimum wage is to be increased this October after the Department of Trade & Industry accepted the Low Pay Commission's recommendations.
The adult rate, for those 22 years old and above, will increase from £4.20 to £4.50 - a 7% hike. The developmental rate, for those between 18 and 21 years old, will increase from £3.60 to £3.80.
The Government has also provisionally accepted the commission's recommendations that the rates should be further increased in October 2004. The suggested increases are to £4.85 for the adult rate and to £4.10 for the developmental rate.
The hospitality industry has given the increase a cautious thumbs-up, although uncertainty about Iraq remains a concern in regards to future increases.
"We are entering uncertain economic times, so the fact that next year's possible increase is subject to review, rather than mandatory, will be a comfort should the economy dip," said Martin Couchman, deputy chief executive of the British Hospitality Association. "On balance, we think the commission has handled things well, taking a balanced approach. They have avoided the dramatic increases of a few years ago and, in doing so, avoided setting the rates at levels disastrous to our industry."
Jane Sunley, managing director of staff-retention company Learnpurple, said anything increasing base wages in hospitality was positive, as it would make the industry a more attractive job or career option.
"Businesses should regularly be looking at market rates anyway - not just in this industry but in comparable industries that compete with us for labour, such as retail," said Sunley.
A spokesman for pub chain JD Wetherspoon's was equally sanguine. "We have always paid our staff more than the national minimum wage," he said. "Not to do so is short-sighted. You have to pay your staff what they're worth, because it's they who contribute to the business's success."
The commission has announced that it will be looking at the possible effects of increasing the national minimum wage to include 16- and 17-year-olds.
The TUC has published figures on the proposals showing that 290,000 UK workers would benefit if the developmental rate were expanded to cover these younger workers.