Basic pay rates will increase to £10.67 per hour for craft workers from January, with the agreement running for a year.

The three trade unions in the Construction Industry Joint Council described the offer as a significant improvement for workers from the 1.6% offered in June.

As part of the pay deal, employers and unions agreed to form a working party to look at more appropriate rules for workers undertaking highways maintenance work and to review pay rates for crane operators and plate layers.

The CIJC will also introduce a new rule, which will help to rid the industry of the problem of rolled up holiday pay.

Steve Murphy, general secretary of Ucatt, said: “This was the absolute minimum that construction workers were prepared to accept. Employers must understand that this is only the first step in addressing low pay.”

John Allott, of Unite, said: “It is essential that future pay awards begin to genuinely tackle the problem of low pay in order that the agreement is of value to both sides.”

Phil Davies of the GMB, added: “The offer was the best that could be achieved under the present economic circumstances. Further pressure will need to be applied to improve pay in the future.”

Minimum wage levels will be up for review again on 6 January 2014.