Australia’s lowest-paid workers are to get a $13 a week pay rise.

This means the national minimum wage will rise by 1.75 per cent to $753.80 a week or $19.84 per hour from July 1, the Fair Work Commission announced on Friday.

The rise falls well short of the 3 per cent increase to the minimum wage in 2019.

Commission president Justice Iain Ross said it came amid a significant downturn in Australia’s economy, driven by the coronavirus.

“The shock to the labour market has been unprecedented,” he said in a recorded message released on Friday morning.

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

“The outlook, including the nature and speed of the expected recovery, remains highly uncertain,” he said.

Peak union body the ACTU had pushed for what is called a “modest” 4 per cent rise this year.

Business groups had argued the minimum wage should be frozen until mid-2021 because, they said, that would enable people affected by the coronavirus-driven downturn to find jobs.

The commission’s decision directly affects 2.24 million low-paid workers and indirectly affects many more.

Industrial Relations Minister Christian Porter had opposed any substantial increase to what is already the world’s highest minimum wage.

Justice Ross said the more moderate boost comes amid a significant downturn in Australia’s economy, driven by the pandemic.

On Friday, 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 was relieved the call for a freeze had been knocked back.

ACTU Secretary Sally McManus said the increase would help buoy the pandemic-stricken economy, given low wage workers – who make up about 21 per cent of Australia’s workforce – spend all of the money they earn.

“Giving low paid workers, award workers, an increase is the very best stimulus that can happen,” she said.

-AAP