Around 1.8 million workers will receive a pay rise on Monday when the National Living Wage increases by almost 5%.

The hourly rate for adults goes up from £7.83 to £8.21, worth an extra £690 over a year in what the Government said was the biggest ever increase in the figure.

The hourly rate for 21 to 24-year-olds goes up from £7.38 to £7.70, and from £5.90 to £6.15 for 18 to 20-year-olds.

Workers in the retail and hospitality sectors will benefit the most, said the Government.

Business minister Kelly Tolhurst said: “We are committed to making sure that UK workers get a fair day’s pay and the rise in the National Living and Minimum Wage, benefiting millions of people, delivers on this commitment.

“Since the National Living Wage was announced in 2015, it has helped protect the lowest paid, increasing faster than inflation and average earnings.

“Our minimum wage rates are among the highest in the world and, through our modern industrial strategy, we are determined to end low pay and workers get a fair day’s pay for a fair day’s work.”

The increases came into effect on the 20th anniversary of the launch of the national minimum wage.

A study by the TUC suggested that young workers are missing out because of the lower rates for their age group.

The average 21 to 24-year-old minimum wage worker is earning £800 a year less than over-25s, the research indicated.

The TUC called for all over-21s to be paid the full minimum wage rate and for it to be raised to £10 an hour as soon as possible.

General secretary Frances O’Grady said: “Unions played a key role in winning the minimum wage at a time when many were warning that it would bankrupt the country, but as we mark its 20th anniversary today, we can see there’s still more to be done.

“Young workers are still getting a raw deal on pay. Their bills aren’t any cheaper, but they have to make ends meet with less.

“With in-work poverty rising, we need to make the minimum wage fit for the future by raising it to £10 as soon as possible.”

The GMB said millions of workers would be more than £7,500 a year better off if the minimum wage had increased at the same rate as the pay of company executives.

If statutory pay had kept pace with the average pay of FTSE 100 chief executives, it would now be £11.41 an hour, the union claimed.

Katherine Chapman, director of the Living Wage Foundation, which campaigns for a higher, so-called Real Living Wage, said: “The increase in the government minimum wage will provide a welcome boost for low-paid workers, but this is still over £1,500 a year short of a Real Living Wage.

“Around six million workers are now paid less than the living wage and are struggling to keep their heads above water.

“The only way to close the gap is for more businesses to step up and commit to a wage that covers the cost of living.”