The Fair Work Commission (FWC) on Wednesday announced that from July 1 the minimum hourly pay rate will increase from 20.33 Australian dollars (14.06 U.S. dollars) to 21.38 Australian dollars (14.78 U.S. dollars), meaning full-time minimum wage workers will earn an extra 40 Australian dollars per week (27.65 U.S. dollars).
According to the commission, the decision will affect at least 2.7 million workers.
The federal government and Prime Minister Anthony Albanese had called for the FWC to increase the minimum wage by at least 5.1 percent in order to be in line with inflation.
Unions had asked for at least 5.5 percent and employer groups for 2.5 percent.
FWC President Iain Ross said the rising cost of living was putting too much pressure on low-paid workers.
"We are conscious that the low-paid are particularly vulnerable in the context of rising inflation," he said, according to the Australian Broadcasting Corporation.
"If we were to accept the submissions of some of the employer bodies, and award no increase at all, then the real wage reduction would be even more severe."
The head of the Reserve Bank of Australia, Philip Lowe, on Tuesday warned that inflation would likely reach 7 percent by the end of 2022.
The Australian Council of Trade Unions described the FWC decision as "reasonable and fair."
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