The minimum wage in Australia is to increase by $A19.40 to $A589.30 per week.
Fair Work Australia issued the decision on Friday after a ruling last month based on a test case by 200,000 community and disability workers employed by the non-government sector, who sought a pay increase of 25%.
The ABC reports they were hoping for an increase of $A28 per week to help deal with the increasing cost of living, but industry groups said that would put pressure on small businesses and could push up inflation.
The minimum wage went up $A26 [er week last year after a freeze in 2009.
Australian Chamber of Commerce and Industry spokesman David Gregory said the brunt of the increase would be borne by retail, hospitality, accommodation, tourism, small manufacturers.
''They are doing it tough at the moment,'' he said.
But ACTU secretary Jeff Lawrence said the cost of living was going up and the economy could accommodate a larger rise.
''There certainly is capacity to pay,'' he said.