The deal has been struck by the Building and Allied Trades Joint Industrial Council (BATJIC) and will come into effect on June 17.

The rise will be across the board except for the hourly rate for Adult General Operatives which will increase by 3%.

There will also be improvements in the death benefit scheme which will be increased to £25,000, and statutory sick pay will rise to £119 per week.

Brian Berry, Chief Executive of the Federation of Master Builders said: “Despite a continuing challenging market and bleak outlook for some time to come, we are pleased to have been able to reach this agreement with Unite.

“Those involved in the construction sector are all too aware of the continuing pressures from rising material costs, regulatory burden and chronic difficulties in accessing finance, so we are happy to be able to underline employers’ continued commitment to maintaining standards and capacity across our industry.

“This settlement reflects employers’ determination to preserve jobs while delivering an equable pay increase to hard-working employees even during difficult times.”

John Allott, Unite the Union’s National Construction Officer, said: “We welcome the FMB’s increase and commitment to the agreement and direct employment.

“The higher increase to the lower pay was needed, as many operatives are struggling to pay rising food and energy bills.”