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Sydney - The minimum wage in Australia was raised 2.6% Monday, pushing the lowest weekly wage to AU$622 ($597)
The decision by The Fair Work Commission affects 1.5 million people and will take effect July 1.
It was half the increase unions wanted but three times higher than the level employers wanted.
Commission president Iain Ross said an expected increase in unemployment and a steady inflation rate led to the decision.
"If not addressed these trends may have broader implications both for our economy and for the maintenance of social cohesion in Australia," Ross said.
Australian Chamber of Commerce and Industry chief executive Peter Anderson called it a blow for small businesses.
"This is $1.5bn of increased wages that have to be funded by Australia's small and medium business community," Anderson told the Australian Broadcasting Corporation.
