The Fair Work Commission on Tuesday ruled that the national minimum wage will now become $17.70 an hour, or $672.70 a week, from July 1.

The decision is likely to anger trade unions, which had been calling for a $30-a-week increase to halt what it called an alarming slide in living standards of the nation's lowest-paid.

Australia's influential employers groups were hoping for a smaller lift of less than 2 per cent.

The commission's full bench, headed by president Iain Ross, said Australia's "robust" economic climate provided a good opportunity to help out employee households that had "low or very low disposable incomes"

"The general economic climate is robust, with some continued improvement in productivity and historically low levels of inflation and wages growth," Justice Ross said.

"The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment ... it will, however, mean a modest improvement in the real wages for those employees who are reliant on the [national minimum wage] and modern award minimum wages."

Justice Ross also said women were over-represented among the country's lowest-paid workers who relied on award rates.

"Increases in minimum wages can provide some assistance in addressing the gender pay gap," he said.

From July, the increase will flow directly to more than 800,000 workers, and will also lift the pay packets of another 1.1 million Australians whose wages are set by modern awards – the pay and conditions safety nets for different occupations.

Australian retailers called the $15.80 minimum wage rise "unimaginable" and said it could cause further damage to retailers who were struggling to get by. 

The Australian Retailers Association, which had called for an increase of no more than $7.90, said the ruling meant the pay rate for shop assistants would increase to $19.44 an hour.

"Retailers and young Australians have been reliant on pay rates to enable retail to bring on low-skilled young staff and increase their skill levels, reducing youth unemployment," association executive director Russell Zimmerman said.

"Many small to medium enterprise retailers are reliant on a minimum wage workforce, and the announcement today to increase wages during this time of low consumer confidence and low growth will sadly result in further job losses and business closures – a very distressing truth for retailers."

In 2015, the Fair Work Commission awarded a 2.5 per cent boost to the minimum wage, which translated to an increase of $16 a week.

More to come