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However, small and medium-sized businesses in particular need to work out very carefully what the increase will mean to them.

In some industries where the of staff on the minimum wage is high and margins are low, the increase could have a noticeable effect which businesses will need to forecast accurately.

This could apply most clearly in people-oriented service industries, where staff costs are high relative to turnover.

It is not uncommon for staff costs in privately owned pubs, hotels and restaurants, for example, to amount to over 20% of turnover.

The 7% rise in the minimum wage - which will also mean a rise in National Insurance costs - could therefore mean that anything between 1% and 1.5% of turnover will be taken up by the increase.

Other businesses that employ a high number of operational staff such as warehouse operatives, drivers and security staff are also likely to notice the difference.

Preparing for the increase

What should businesses be doing? On a very practical level, of course, they need to ensure that their payment systems are ready for the change from 1 October.

Indeed, businesses could be liable for a 5,000 fine (and back-dated pay) if they do not implement the increase.

In addition businesses should:

• Assess how much the increase will add to their wage bill

• Work out the extent of the additional National Insurance costs
• Ensure that their financial forecasts for the year take account of the increase
• Consider whether staff on slightly more than the minimum wage will also expect an increase to preserve pay
• Communicate the change to staff.

The increase is good news for those on the minimum wage, and it could also help their employers in retaining them.

Low pay and often anti-social hours mean that it is becoming more and more difficult for companies to recruit and hold on to good, reliable manual workers - often the operational backbone of their company.

This increase, in closing the gap a little between the minimum wage and better paid jobs elsewhere, may help some companies to hold on to more of their staff for longer.

Nothing improves morale like a pay rise, after all.

However, a wider problem remains. There has been much talk of a skills shortage in UK plc, at management level and in areas such as IT in particular.

But a skills shortage at the more operational level seems to be becoming just as acute.

How to keep key workers in low margin/low pay industries is a problem that many companies will have to keep wrestling with.