The UK minimum wage was introduced in 1999

The CBI says the hourly adult rate of �5.52 makes the minimum wage the third highest in the world after France and Australia, and is hurting some firms.

It claims the rate has increased 53% since its introduction in 1999, while average earnings have risen 38%.

Unions have said the minimum wage has boosted wages for the lowest paid.

New rates

This year more than a million workers received a pay rise when increases to the minimum wage came into force.

On 1 October the adult rate for the statutory minimum wage went up from �5.35 to �5.52, and from �4.44 to �4.60 for 18 to 21-year-olds.

The rate for 16 and 17-year-olds increased from �3.30 to �3.40 an hour. Now the CBI is saying minimum wage has risen faster than in any other developed country in the world when productivity gains are taken into account.

It also claims that some firms are unable to employ more staff or invest in their businesses because of the cost of the rise.

And it says some firms have reduced staff hours and benefits to remain competitive as a result of the minimum wage.

'Steep rises'

John Cridland, deputy director general of the CBI, said living standards for many had been helped by the minimum wage.

But, he added: "Previous steep rises have loaded extra costs on to employers who face a less certain outlook for next year as interest rates bite and the world economy slows.

"This year's increase makes our minimum wage the third highest in the world.

"The era of continually increasing the numbers of employees covered by the wage should now come to an end."

When the rises were announced earlier this month, TUC general secretary Brendan Barber said the increase would "provide a much-needed boost to the pay packets of millions of low paid workers".

"Unions would have liked a bigger increase but at this level there is nothing for businesses to complain about," he added.