Australian retailers warned on Thursday that jobs will have to be cut after the minimum wage rose by 18.70 AU dollars a week.
ABC News reported that the decision by the Fair Work Commission (FWC) to lift wages, will directly affect around 1.5 million Australians on award wages.
FWC President Justice Iain Ross said award wages had not grown for some time.
"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 labor market, are all factors favoring a real increase in minimum wages," he said.
Peak union group the ACTU wanted a weekly rise of 27 AU dollars, while employers were pushing for 8.50 AU dollars a week.
Australian Retailers Association executive director Russell Zimmerman said the decision will force businesses to let go of staff.
"The retail industry is more reliant on pay scales than any other industry, and also suffers a highly disproportionate effect in minimum wage increases ... due to deregulated hours and penalties across all retail awards," he said.