However, the minimum wage for workers aged under 21 will be unchanged, remaining at £4.98 an hour for 18- to 20-year-olds and £3.68 an hour for 16- and 17-year-olds.

The rate for apprentices will increase by 5p to £2.65 an hour and all rate changes will come into effect on 1 October 2012.

Cable told the BBC the minimum rate of pay for workers in different age bands, strikes “the right balance between pay and jobs”.

He said: “In these tough times freezing the youth rates has been a very hard decision but raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run.”

Last week, the Office of National Statistics (ONS) revealed that the number of people unemployed in the UK rose by 28,000 in the three months to January to a total of 2.67m.

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Youth unemployment for those aged 16 to 24 continued to worsen, rising 16,000 to 1.04m.