Australia’s lowest paid workers will receive a $40 a week pay raise from July 1 after the industrial umpire raised the national minimum pay by 5.2 per cent, the highest rise since 2006.

Fair Work Commission president Iain Ross announced the outcome of its annual wage review on Wednesday morning, 12 days after the new federal government recommended the independent body increase the pay of low-paid Australians in line with the 5.1 per cent inflation rate to ensure wages did not go backwards.

The national minimum wage will rise to $21.38 an hour from 1 July and is paid to about 180,000 Australians. It is equivalent to a pay raise of $40 a week and takes the weekly minimum wage to $812.60.

The decision also affects about 2.7 million Australians on industry awards, with those on unskilled awards receiving $40 more a week, and those on skilled rates receiving a 4.6 per cent increase.

Prime Minister Anthony Albanese ignited a political storm when, as opposition leader during the election campaign, he said he “absolutely” backed a pay increase for minimum wage earners to match the rate of inflation, prompting former prime minister Scott Morrison to call him a “loose unit” in what became a defining election issue.

Nine Radio’s national political editor Michael Pachi told 6PR Mornings host Liam Bartlett the Reserve Bank’s decision not to raise interest rates last year had prompted the minimum wage increase.

“Anthony Albanese would be happy with today’s decision because the government did make a submission to the Fair Work Commission urging the board to increase wages by at least the rate of inflation, that has now happened,” Pachi said.

Tap PLAY to hear Michael Pachi’s wrap of today’s increase on Mornings

#BREAKING Prime Minister @AlboMP addresses cabinet, as the Fair Work Commission hands down a 5.2% increase to the minimum wage. On par with what his govt pushed for. Expect his response around lunchtime. @9NewsAUS pic.twitter.com/fc7RBB0Kuq

— Eliza Edwards (@ElizaEdNews) June 15, 2022