Lidl will pay all its staff the new higher rate set by the Living Wage Foundation, the discounter has announced.

As of March next year the retailer, which became the first major supermarket to pay its workers the rate in November 2015, will pay a minimum of £8.45 per hour, and £9.45 in London, in line with the new hourly rates set by the Foundation in October.

The wage increase will see its lowest paid staff earn 13% more than those on the new National Living Wage rate announced by the government yesterday of £7.50 per hour for over 25s.

Nan Gibson, Lidl UK HR board director, said of the decision: “We recognise the contribution of each and every colleague within the business and we feel it’s important to celebrate our achievements together. So it fills me with pride that our colleagues are amongst the best paid in the supermarket sector, and it’s absolutely deserved for the commitment and value they bring to the company every day.”

The retailer says applications for its roles have increased by 20% in the 12 months since it announced it would pay the Living Wage rate, with 630 new permanent positions currently being recruited for ahead of the busy Christmas period.

“This announcement comes at a time when our business is going from strength to strength and our market share has reached a record high of 4.6%,” added UK CEO Christian Härtnagel, “It is one of many commitments that we will be making to our colleagues in the near future.”

However, though the Living Wage Foundation has welcomed news of the retailer’s commitment, it also urged the business to go one step further and offer the same pay to subcontracted staff such as cleaners, a move that would allow it to apply for accreditation from the organisation.

“Lidl’s commitment to pay their staff the new real Living Wage rates is fantastic news and an acknowledgment of what we have always believed and advocated - that it is possible to pay the real Living Wage if you are a supermarket in the UK,” said director at the Foundation Katherine Chapman.

“We would love to see Lidl go further and signal their long-term commitment by accrediting with the Living Wage Foundation to guarantee that all subcontracted staff such as cleaners are paid the real Living Wage. This will also reassure workers that their wages will rise in line with the cost of living every year.

“Retailers such as IKEA, Oliver Bonas, Burberry and Majestic Wines have already signed up as Living Wage Foundation accredited employers but the title of becoming the first Living Wage accredited supermarket is still up for grabs.”