The increase falls far below the $30 per week rise the ACTU wanted, but well above the $7.90 to $10.50 rise business groups had lobbied for.
However, business says the 2.4 per cent increase granted by the Fair Work Commission risks putting pressure on unemployment.
FWC president Iain Ross said Australia's low inflation and robust economy should be used to give the lowest paid workers an extra $15.80 a week from July 1 to $672.70.
"The level of increase ... will not lead to inflationary pressure and is highly unlikely to have any negative impact on employment," he said on Tuesday.
Mr Ross said the general economic climate is robust, with continued improvement in productivity and low levels of inflation and wages growth.
"The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid and enable them to better meet their needs," he said.
The increase was below the $30 a week rise the ACTU wanted but above the $7.90-to-$10.50 rise business groups had sought.
Shorten welcomes Fair Commission's decision
"The really horrible fact is that under the Liberal government, wage increases have flatlined," Mr Shorten told reporters.
ACTU secretary Dave Oliver was disappointed that the commission missed an opportunity to address the growing gap to average wage earnings.
He said over the last 12 years minimum wages have gone in the opposite direction to the average wage earners.
"If that trend continues we'll end with US-style working poor in this country," he told reporters in Canberra.
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Opposition employment spokesman Brendan O'Connor said if the federal government had made a submission and indicated wages growth has been at its lowest since at least 1998, then the decision may have even been more favourable.
Minimum wage hike 'too high'
But Australian Chamber of Commerce and Industry boss James Pearson says the commission does not appear to have taken into account the impact the increase will have on unemployment.
He said the increase is nearly double the inflation rate at 1.3 per cent and higher than private sector wage settlements over the past year at 1.9 per cent.
"That makes it that a little bit harder today for businesses, particularly small businesses ... to make ends meet," he told reporters in Canberra.
Russell Zimmerman from the Australian Retailers Association says retailers may have to cut hours or put a freeze on hiring new staff because the increase is double what they had been hoping for.
"This is a big problem for the industry and unfortunately I think retailers will have to look at their payrolls and may well have to decide whether they can reduce hours even further," Mr Zimmerman told AAP.
Australian Industry Group head Innes Willox said it will be a significant impost on businesses at a time when the economic and business environment is "difficult, risky and uncertain".
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