Derby City Council to introduce living wage from 2014
Low-paid workers workers at Derby City Council will see their minimum hourly wage increase by 2014.
Pay for about 1,000 employees will rise to a guaranteed £7.45 per hour as the council has committed to the living wage.
The council said the move would help its poorest employees survive "tough economic times".
Derby City Council is one of several Labour-run authorities to adopt the living wage policy.
Sarah Russell, cabinet member for finance, business and democracy, said: "The cost of living has never been higher.
"We are hoping to help people and make sure they can survive in these tough economic times."
But George Cowcher, chief executive of the Derbyshire Nottinghamshire Chamber of Commerce, said the policy was difficult to justify in a recession.
"The UK has only just emerged, according to official figures at least, from a double-dip recession and with the recovery still fragile, now is perhaps not the right time to be talking about the introduction of the living wage.
"It's far more important to protect and create jobs at this stage and once the recovery is more secure, then look at increasing pay levels."
Labour leader Ed Miliband has said if the party wins the next election it will introduce rules forcing government contracts to only be given to those firms who pay the living wage.
The government said it backed companies paying a living wage and would encourage more businesses to do so, but said restricting government contracts in this way could be illegal.