Businesses and trade unions are at odds over the future of the national minimum wage as the Trade Union Congress (TUC) calls for a 50p increase.
They argue that the increase, which at £5.53 is about eight times the rate of inflation, should be followed by another hike in 2006.
For adults, the minimum wage rose to £4.85 on October 1, while similar increases were enjoyed by younger workers.
The trend looks to continue as the Low Pay Commission (LPC) is taking advice on where to pin the figure next October.
A group of trade unions have called for bigger increases than those put forward by the TUC, but business groups maintain that this is unrealistic and some are calling for levels to be frozen in 2005.
According to a survey by the British Chambers of Commerce (BCC), 50 per cent of companies want a cap on the minimum wage in line with current inflation, while 30 per cent said they would accept a cap in line with average earnings.
David Stanbridge, chief executive of the BCC, said: "Further such increases will harm our competitiveness and could result in job losses. The survey results show that the rate has now reached a level that will impact on business effectiveness - so enough is enough.
The BCC believe a further increase would also prove detrimental to employment levels.
"This would inevitably lead to fewer jobs - as marginal businesses shed staff - not better paid ones." said Stanbrdge.
Since its introduction in 1999, the minimum wage has risen by about 7% per year. Initially, businesses backed the scheme, but successive increases are putting pressure on profit margins.
Bosses complain that hikes put upward pressure on the salaries of better-paid staff, who may also demand pay rises if they see less qualified staff moving up the pay ladder.
Government statistics released today show that 272,000 UK jobs currently pay below the minimum wage. Part-time jobs were three times more likely to be paid under the legal rate, and women were twice as likely to be cheated than men.
