Campaigners fighting for a minimum Oxford wage were celebrating last night after the city council decided to put its lowest paid employees on £7 an hour.
Those fighting for a rise in public sector pay want a living wage to compensate for the high cost of living in Oxford - are now hopeful other public sector bodies and businesses will follow the council's landmark decision.
A recent survey by Nationwide Building Society showed Oxford was the third most expensive place to buy a home in the UK after London and St Albans, with prices averaging £339,404.
Labour city councillor Joe McManners started the ball rolling by tabling a motion calling for a minimum £7-an-hour rate late last year.
The change will come into effect in April next year.
Mr McManners and campaigners said the national minimum wage of £5.52 was too low for Oxford and wages should be increased to cure the city's chronic poverty problem.
He said: "Oxford is one of the most expensive places to live in the country and it's about time that was reflected in people's wages.
"We are now looking for other public sector services and private businesses to follow the council's lead.
"This isn't just going to benefit workers. There's some good evidence employers who pay a living wage notice an increase in productivity and a decrease in the amount of sick leave."
David Hawkins, chairman of Unison's city council branch, said: "We have won the fight for workers and hopefully the council is going to be one of the main pushers for employers to follow this across the city."
There are currently 52 council employees earning under £7 an hour. The wage increase would be worth almost an extra £2,000 a year to the most poorly paid employees - all currently earning £6 an hour - based on a 37-hour working week.
There are more than 800 health workers in Oxfordshire registered with Unison all earning less than £7 an hour.
Mark Ladbrooke, secretary of Oxfordshire Unison health branch, said: "This is an excellent initiative from the council and now hopefully it will filter out to the rest of the public service workers in Oxfordshire.
"People are suffering. People work all hours of the day to make up for the fact they are on low pay often working two or three jobs and in some cases making themselves sick."
The move was welcomed by Ed Aldridge, a bar supervisor at O'Neill's bar in George Street, Oxford.
Now living in Cowley, the 20-year-old is currently paid £5.62 an hour - 10p above the minimum wage for his full-time job.
Mr Aldridge said: "£7 an hour would be a fair wage.
"All my bills keep rising above inflation - and my council tax went up - but the thing that never goes up is my wages.
"I can just about make ends meet, but I have to be very careful with the amount of gas and electric I use at the moment.
"It's even harder for some other bar staff I know who have kids and are trying to get by.
"Oxford should have its own minimum wage.
"The prices here are the same as London, but the wages are lower.
"The cost of a pint is pretty much the same as London, the cost of a cab is the same and grocery bills are very comparable. It is very expensive to live in Oxford."
Barry Wheatley, chairman of the Oxfordshire Federation of Small Businesses, said: "I can see where the campaigners are coming from, but this would be difficult to implement.
"Raising everyone to £7 an hour could be terribly inflationary."