Mr Foster said revitalising business investment was “the key to unlocking productivity gains and driving sustainable wage rises across the economy”, adding:“Achieving this shared goal requires business and government to work together to find a long-term solution to inactivity and the wider labour costs undermining competitiveness.”
Kate Nicholls, the chief executive of UKHospitality, said the announcement would add £1.9 billion to the wage bills of struggling pubs and restaurants.
She added: “Trying to balance the books from the pockets of high street businesses will simply leave hospitality as collateral damage, threatening jobs, future investment, price increases for consumers and business viability.
“Our companies desperately want to be able to support higher wages for staff – but what is being asked of them is simply unsustainable if taxes are going to shoot up at the same time.”
Britain’s largest trade union also sounded the alarm over the increase, warning that it could even lead to an exodus of workers from the NHS. Unison said the huge rise in the living wage meant it was now higher than the minimum wage paid to many health service staff.
Jon Richards, the assistant general secretary, said: “This much-needed boost will see millions of workers struggling a little less from next spring. But as it stands, the new legal minimum is more than the current lowest hourly rate in the NHS, universities and some other public services. This will give employers multiple headaches.
“To avoid this in the NHS, the government should ditch the outdated pay review body process and start talks with unions now. This will ensure wages remain competitive for all employees, so staff don’t leave the NHS.”