Newcastle City Council has become the first council in the region to give its lowest-paid workers a pay rise to the so-called 'living wage'.
Two thousand people are now earning £7.20 an hour - a pound more than the national minimum wage.
The amount is an independent assessment of how much it costs to live.
However, it is estimated that the move will cost the council nearly a million pounds a year.
The trade union Unison is now campaigning for other councils to follow suit.
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The move is likely to lead to the loss of more than 1,500 jobs.
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