German supermarket Lidl will be increasing wages next year, from 2.9% up to 3.4%, for thousands of its workers across the UK.
This means the firm will continue to pay workers at an hourly rate above that of the government-mandated National Living Wage, the company said.
Britain’s unemployment rate is at its lowest in more than 40 years, and average pay excluding bonuses is now rising at its fastest rate since 2009.
The announcement from Lidl, and a similar announcement from Amazon last month, could put pressure on retail rivals.
The firm has said entry-level wages will increase from £8.75 ($11.40 ) to £9 ($11.7) an hour outside of London and from £10.20 to £10.55 an hour within the capital.
The increase will come into effect from March 1 next year and will directly benefit over 17,000 Lidl employees – costing the retailer an extra £8m.