Younger workers on the minimum wage are set to receive a £450 pay rise per year.
Wages for younger workers are now:
• £6.95 per hour - 21-24 year old (25p increase from £6.70)
• £5.55 per hour 18 - 20 years old (25p increase from £5.30)
• £4 per hour - 16-17 years old (13p increase from £3.87)
• £3.40 for apprentices under 19 or 19 or over who are in the first year of an apprenticeship (10p increase from £3.30)
While the national minimum wage still applies for workers up to the age of 24, the national living wage has replaced the minimum wage for all workers aged 25 and over.
The national living wage rose to £7.20 in April.
A chamber of commerce survey of more than 1,600 business leaders across the UK found 34 per cent have had to increase their wage bills since its introduction.
It found that two thirds of those surveyed were already paying their staff above the new living wage.
But the government has insisted this is the highest rate ever in real terms.
Business Secretary Greg Clark said: "The Government promised to create an economy that works for all and today's increase means our lowest paid workers will benefit from their largest pay rise since the recession.
"This will make a real difference to hard-working people up and down the country and means for the vast majority of workers, the national minimum wage is at its highest level in real terms."
The TUC however has called for all workers to receive the national living wage of £7.20 an hour, which currently only applies to workers over 25.
TUC general secretary Frances O'Grady said: "Today's increase will be welcome news for young workers, but there is no justification for paying people in their early 20s 25p an hour less than other adults.
"Their employment rate is rising and they work just as hard as older workers, yet are entitled to less at the end of the week.
"These young workers are getting a raw deal - it's time for the Government to bump them up to the full minimum wage."
Federation of Small Businesses chairman Mike Cherry, added: "Small businesses are reacting to difficult economic conditions with characteristic resilience, but they will need more help if increases to the minimum wage are to be a success and not affect employment levels or investment decisions.
"We call on ministers to consider a significant uprating of the Employment Allowance from its current £3,000 level.
"This has already helped to boost pay levels and incentivise job creation, and could be the lifeline many smaller firms need due to fast-rising labour costs."