Analysis by think tank Resolution Foundation has claimed the new rate of £7.20 an hour for workers aged 25 and over – which comes into effect in April – will impact 23 per cent of all employees across the nation by 2020.

Furthermore, in Sheffield, 28 per cent will be affected, with Nottingham predicted at 27 per cent and Birmingham 26 per cent. These compare with lower proportions in cities such as Cambridge (15 per cent), London (14 per cent) and Oxford (13 per cent).

In Scotland, 33 per cent of Clackmannanshire employees will be affected, followed by Dumfries and Galloway (32 per cent) and East Renfrewshire (31 per cent). However, city employees are expected to be less affected, such as Dundee (18 per cent), Edinburgh (17 per cent) and Aberdeen (16 per cent).

“The welcome new national living wage will have a huge impact on low pay, particularly towards 2020 as it approaches £9 an hour,” Conor D’Arcy, policy analyst at the Resolution Foundation, explained. 

“While our analysis suggests the pay rise should be affordable for most firms, implementing the new wage floor will be challenging for some employers. That’s particularly true in areas where wages tend to be lower. Politicians must work closely with employers to ensure that the national living wage is a success, particularly in low-paying sectors.

“It will take more than a higher wage floor to tackle Britain’s low pay problem. Governments and employers need to boost progression, making the most of employees’ existing skills and helping them to develop new ones. With the NLW set to rise significantly in coming years, it’s vital that positive steps are taken now before the higher wage floor begins to bite.”

Read more about the National Living Wage:

• Business minister warns firms not to fall “foul of the law” when it comes to Living Wage
• Whitbread CEO Andy Harrison plans to raise prices at Costa Coffee to pay for Living Wage
• Firms must adapt or die in the wake of the National Living Wage

The think tank is also calling for an expansion to the voluntary living wage of £8.25.

The BBC quoted a government spokesperson as having said: “The government is making sure Britain gets a pay rise and that businesses have the skills needed to succeed. We are already seeing record employment rates and real wages growing to levels not seen since the recession.

“As the report itself highlights, workers in some cities will see even bigger benefits, reinforcing our drive to rebalance the economy through the northern powerhouse and the devolution of powers to local government and cities.

“The Scottish government agrees with the Resolution Foundation’s assessment of the national minimum wage – while any increase is welcome, it falls well short of the living wage of £8.25. There are now well over 400 organisations paying the living wage in Scotland, compared to just a handful a year ago and more than 80 per cent of Scots receive £8.25 or higher.

“However, we would call upon more firms to recognise its benefits including including improved morale, higher productivity and lower absence rates.”