31/05/2016 3:03 PM AEST | Updated 15/07/2016 12:53 PM AEST

Fair Work Commission Raises Minimum Wage By $15.80 A Week

It takes effect from July 1.

The Fair Work Commission has raised the minimum wage.

The nation's lowest paid workers will receive a pay increase, following Fair Work Ombudsman's annual minimum wage decision.

The Fair Work Commission on Monday lifted the national minimum wage by 2.4 per cent -- from $656.90 a week to $672.70 per week .

Put another way, that's $17.70 an hour up from $17.29 per hour -- an increase of $15.80 per week.

Unions were pushing for a $30 per week increase, while business has been pushing for an increase of between $8 and $10 per week.

The commission found wages growth was neither a source of inflationary pressure win the economy, nor was it source of declining capacity for Australian firms to compete in international markets.

"The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any negative impact on employment," the FWC said in a statement.

"It will, however, mean a modest improvement in the real wages for those employees who are reliant on the NMW and modern award minimum wages."

More than 1.8 million people who are on the minimum wage will receive the increase from July 1.

The decision follows a 2.5 percent rise in the minimum wage, to $656.90, last year, as well as a three percent increase in 2014.

The Australian Council of Trade unions said most workers (57.5 per cent) are women and are typically younger than the workforce as a whole.

"Women continue to be over-represented among the award reliant and the low paid," the FWC said in its review.

"It follows, and we accept, that increases in minimum wages can provide some assistance in addressing the gender pay gap."

In a submission to the Fair Work Commission earlier this year, the Australian Council of Social Services said the federal minimum fell in real terms over the 1980s and early 1990s, but rose moderately from the mid-1990s to the mid-2000s.

"As a result, its real value is approximately the same now as it was 20 years ago," ACOSS said.

Australia currently has a low inflation rate of 1.3 percent, below the Reserve Bank's target band of between 2 and 3 percent.

Last month it cut the interest rate to an historic low of 1.75 percent.