Fair Work Commission announces 5.75 per cent increase on minimum wage

The country's lowest-paid workers will receive a 5.75 per cent pay rise after the Fair Work Commission's annual minimum wage review.

Currently the minimum wage sits at $21.38 per hour or $812.60 per 38 hour week (before tax).

The new rates will apply from July 1.

READ MORE: US President trips and falls at event

The national minimum wage, which is earned by about 184,000 workers not on modern awards, has also been readjusted to align with a C-13 wage rate, as opposed to the previous C-14 rate.

C-13 offers a higher rate per hour and is the "lowest classification made applicable to ongoing employment in most awards" according to FWC president Justice Adam Hatcher.

The Australian Financial Review reported this meant that in real terms, combined with the 5.75 per cent increase, national minimum wage earners would receive a boost of 8.6 per cent.

The hourly rate will increase to $23.23, or from $812.60 to $882.80 a week.

That's a weekly increase of $70.20.

Australian Council of Trade Unions secretary Sally McManus said on Twitter it was the "largest increase awarded".

The bulk of the country's 2.5 million minimum wage workers, who are on modern awards, will only get the 5.75 per cent increase.

FWC president Justice Adam Hatcher acknowledged that the increase would not maintain the real value of the minimum wage due to ongoing inflation.

But he said the increase was "the most that could be reasonably justified".

"In the medium to long-term, it is desirable that modern award minimum wages maintain their real value and increase in line with the trend rate of national productivity growth," he said.

READ MORE: Disease affecting four million Aussies costs Sydney mum her leg

"A return to that path is likely to be possible in future reviews when there is a reversion to a lot of inflationary environment and productivity growth."

Hatcher said the commission had considered the pressures faced by low-paid workers, and the disproportionate impact of a minimum wage rise increase on women - to the point of potentially narrowing the gender pay gap.

Unions had called for it to be increased in line with inflation, currently trending at an annual rate of 6.8 per cent.

But businesses pushed for a 3.5 per cent increase, and argue that anything higher would leave them struggling to pay wages and bills.

After the wage rise was announced, Australian Chamber of Commerce and Industry chief executive Andrew McKellar said businesses faced an extra $12.6 billion in costs as a result.

"It will mean for them that it adds to pressure, which is already intense as a result of significantly higher costs that they've been facing through the supply chain, through energy prices, and now through wages," he told reporters.

McKellar also warned the increase could potentially add to inflationary pressures.

They've warned they could be forced to lay off staff.

About 2.5 million Australians are currently on the minimum wage.

Last year, the Fair Work Commission announced a minimum wage increase of 5.2 per cent, finding that the country's lowest-paid workers were also the most vulnerable in times of rising inflation.

Sign up here to receive our daily newsletters and breaking news alerts, sent straight to your inbox.