Australia's lowest paid workers will get a smaller pay rise this year, but the industrial umpire says the three per cent increase will help them make ends meet.
The national minimum wage will rise by $21.60 to $740.80 a week from July 1.
The new hourly rate of $19.49 makes Australia's national minimum wage the highest in the world, after previously being comparable with or just behind Luxembourg.
The three per cent increase falls short of the previous two years' decisions, but the Fair Work Commission noted it will give 2.2 million workers another real increase in their wages.
Business says the increase will cost employers more than $3 billion a year, while unions believe it should have been more.
FWC president Justice Iain Ross said the decision to award a lower increase than last year's 3.5 per cent reflected changes in the economic environment, particularly the recent fall in GDP growth and drop in inflation, as well as tax-transfer changes benefiting low-paid households.
He said the prevailing economic circumstances provided an opportunity to improve the living standards of the low paid, and to enable them to better meet their needs, by awarding a real wage increase.
Mr Ross said the increase wouldn't have a negative impact on inflation or employment.
"However, such an increase will mean an improvement in real wages for those employees who are reliant on the NMW and modern award minimum wages and an improvement in their living standards," he said.
The expert panel acknowledged some low-paid households were plainly experiencing significant disadvantage, with about three per cent going without meals and unable to afford to heat their homes.
"A real wage increase would assist these low-paid households to better meet their needs," it said.
Despite the commission expecting no adverse effect on employment as with its previous two increases, the Australian Chamber of Commerce and Industry warned the rise could put jobs in danger and risk the viability of some small businesses.
"Australia already has one of the highest minimum wages in the world, and continuously increasing minimum wages by significantly more than inflation has consequences," ACCI CEO James Pearson said.
"It will have serious implications for many small businesses. This is the third increase in a row that is well in excess of inflation, with no link to productivity increases."
ACCI estimated the wage rise would cost employers an additional $3.1 billion a year.
Business groups had generally argued for a wage rise of up to two per cent, compared to 2018's 3.5 per cent and 2017's 3.3 per cent.
The peak union body counted the decision as a win despite only getting half of its desired six per cent increase, saying many bosses had wanted a wage freeze.
ACTU assistant secretary Liam O'Brien said workers were getting a significant increase in real terms, although the union still believed the minimum wage should be higher.
"It is not acceptable that workers in this country who work full-time hours are on less than the poverty line," he said.
The United Voice union said an extra 57 cents an hour will make no meaningful difference to cleaners and aged care, hospitality and retail workers struggling to pay bills and make ends meet.
Australian Associated Press