The Friday announcement by Fair Work Australia (FWA) that boosted the minimum wage in the country by $17.10 a week to $606.40 produced an almost violent reaction from employers.

Business groups warned at the same time of massive job losses in vulnerable industries such as retail because of the additional cost the wage hike will have on operation expenses.

"Today's decision means many retail jobs are officially on the line.... FWA has handpicked and isolated the food, café and restaurant categories to come to the erroneous conclusion that the retail sector is growing," Australian Retailers Association Executive Director Russell Zimmerman was quoted by Startupsmart.

He said the FWA did not listen to plea of retailers that they have no plans of hiring more employees, but even are on the verge of axing jobs. The retail and hospitality sectors had sought exemption from the minimum wage hike, but FWA rejected their request.

"The evidence does not support a conclusion that, as a whole, these industries are suffering economic circumstances which would warrant an exemption from wage increase arising from our decision," the panel said.

The Australian Industry Group (AIG) added that the impact of higher operating cost due to the upward adjustment in minimum wages would also affect Australia's tourism and manufacturing industries. AIG Chief Executive Innes Willox estimated that the FWA decision would add 20 per cent to employer cost due to corresponding increases also in superannuation workers' compensation and payroll tax.

"FWA's decision to grant a wage rise that is significantly higher than current productivity growth rates will push Australia's already relatively high unit labour cost even further above our international competitors," Mr Willox said.

He estimated that besides the $17.10 additional cost to employers for workers earning the minimum wage, the FWA decision would also add another $19.90 to the base trade level pay and $33.20 at the professional level.

Richard Clancy, executive director of industry policy and relations of the Victorian Employers' Chamber of Commerce and Industry said to be hit hardest by the FWA decision are small- and medium-sized enterprises.

On the opposite end, unions found the $17.10 additional pay not sufficient to cope with soaring cost of living. ACTU asked FWA for a $26 per week pay rise.

"(That will) entrench the growing gap between real wage earners and those who are in no capacity to bargain, and that gap will widen and we're concerned that we could end up with a working poor," ABC quoted Australian Confederation of Trade Unions Secretary David Oliver.

Mr Oliver pointed out that the real value of the minimum wage, when adjusted for inflation, rose only by less than 1 per cent while average wages had gone up 12 percent.

"This is a very disappointing decision by Fair Work Australia that means the one-in-six workers who are dependent on award rates of pay will barely keep pace with the cost of living, let alone the rest of the workforce," Mr Oliver told The Australian.

In a turnaround which may not be surprising because of poll results that his popularity with voters is fast declining, Opposition leader Tony Abbott begrudgingly supported this time a federal government decision.

"At a time like this, with a government which is hitting people with new taxes, with more red tape, with greater uncertainty, the last thing I want to do is begrudge them a pay rise," ABC quoted Mr Abbott.

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