Australia’s lowest paid workers will receive a 3 per cent wage rise, under a decision by the nation’s industrial umpire.

The Fair Work Commission has just announced its annual review of the minimum wage, which will directly affect around 1.5 million Australians on award wages.

Minimum wages will increase to $640.90 per week, an increase of $18.70 from July 1.

Fair Work Commission president Justice Iain Ross said there had recently been almost no growth in the real value of award wages, while other employees had enjoyed substantial pay increases.

“The deterioration in the relative living standards of award-reliant workers; the needs of the low-paid; the recent widespread improvement in labor productivity growth; the historically low levels of real unit labor costs; and the absence, in aggregate, of cost pressures from the labour market are all factors favouring a real increase in minimum wages,” he said.

One moderating factor was the superannuation rate increase to apply from July 1.

The ACTU had been pushing for a weekly rise of $27 but employers said they would not be able to afford an increase of anything more than $8.50 a week.

Unions are worried the widening gap between the minimum wage and average earnings means Australia could go down the same path as the US and create a class of “working poor”.

The Federal Government had urged the commission to consider that Australians would be netting an extra $550 a year once the carbon tax was abolished.

Last year the minimum wage rose by $15.80.