The rise will increase minimum incomes from AU$656.90 ($476.70) a week or $17.29 ($12.55) an hour, to $672.70 a week or $17.70 an hour, the Commission said.
The change will affect over 1.86 million employees in Australia who are reliant upon minimum rates of pay, the Commission said.
The decision is a disappointing one for employers, the Australian Chamber of Commerce and Industry said. Chief executive, James Pearson said that the group had asked for an increase of no more than $7.90 per week, "a 1.2% increase that is roughly in line with inflation".
The Australian Council of Trade Unions (ACTU) said that the rise is lower than the 2.5% increase in 2015, and "is still not enough to close the growing gap between average and minimum wages". The ACTU had called for a $30 a week increase, it said.
"This announcement comes after news last month of an agreed pay deal for construction workers in Victoria, adding to mounting employment costs for construction companies in Australia", said Sydney-based Kate Terry of Pinsent Masons, the law firm behind Out-Law.com.
