Minimum wage to rise by $13 a week

While unions are peeved the cash boost is being phased in gradually, they are ultimately glad it is happening.

Business groups say the change will make it harder for employers to offer much-needed jobs.

The national minimum wage will increase by 1.75 per cent to $753.80 per week, the Fair Work Commission declared on Friday at the culmination of its annual wage review.

But the change will be phased in from July 1, with frontline services personnel who have continued working during the coronavirus pandemic the first to receive the boost.

That group - which makes up about 25 per cent of the lowest paid workers, including some above the minimum wage - includes staff in healthcare and social assistance, some teachers and child care workers.

The pay rise will be rolled out on November 1 to industries more adversely impacted by COVID-19 measures, including construction and manufacturing, which make up about 40 per cent of the workforce.

It will lastly be given to low-paid workers in the industries most affected by the pandemic, including retail, accommodation and food services, arts and recreation, aviation and tourism, on February 1, 2021.

They make up about 35 per cent of the workforce.

The 1.75 per cent pay rise falls well short of the three per cent increase to the minimum wage last year.

Commission president Justice Iain Ross said the more moderate boost comes amid a significant downturn in Australia's economy driven by the pandemic, including an unprecedented "shock to the labour market".

There are also significant downside risks to the economy ahead, such as the potential threat of a second wave of coronavirus infections, he said.

"The outlook, including the nature and speed of the expected recovery, remains highly uncertain," Justice Ross said.

Peak union body the ACTU fought for a four per cent rise this year, while business groups had argued the minimum wage should be frozen until mid-2021 to enable people impacted by the coronavirus-driven downturn to find jobs.

The Australian Chamber of Commerce and Industry said the increase was an assault on people running small businesses and those on JobSeeker and JobKeeper, as they grapple with the economic impacts of COVID-19.

"When it's time for businesses to move off JobKeeper, we risk there being less jobs because of this decision," chief executive James Pearson said.

Although disappointed the pay rise won't hit all industries immediately, the Australian Council of Trade Unions is relieved the business groups' proposal has been knocked back.

The Australian Retailers Association is relieved its hard-hit members won't have to stump up more for low paid workers until after the Christmas trading period.

But the retail union, the SDA, said the decision was unfair to supermarket, pharmacy and other workers who have bravely worked during the pandemic.

Industrial Relations Minister Christian Porter said it was "wise" for the commission to stagger the pay rise.

Workers who will receive the boost last should be reassured the government is doing everything it can to help their businesses bounce back, he said.

Australian Associated Press