Australia’s lowest-paid workers will receive a $40-a-week pay raise from July 1 after the industrial umpire raised the national minimum wage by 5.2 per cent, the highest rise since 2006, in a decision praised by Prime Minister Anthony Albanese.

About 180,000 people will see their hourly rate increase to $21.38 an hour from July 1 as a result of Wednesday’s decision by the Fair Work Commission. It is equivalent to a pay raise of $40 a week and takes the weekly minimum pay to $812.60.

Speaking at a press conference in Gladstone, Queensland, Albanese said the decision would “make a difference to the people who are struggling with the cost of living”.

“Many of those people who are on the minimum wage are the heroes of the pandemic. These workers deserve more than our thanks. They deserve a pay rise, and today they’ve got it,” he said.

Fair Work Commission president Iain Ross said soaring inflationary pressures were key to the commission’s decision, adding the “present circumstances warrant an approach which gives a greater level of support to the lowest paid” while seeking to contain inflationary pressures.

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“Headline inflation is now expected to peak at around 6 per cent in the second half of this year, partly driven by higher petrol prices and sharp increases in the cost of new dwellings,” Ross said.

Treasurer Jim Chalmers said on social media he welcomed the decision “to lift the minimum wage by 5.2 per cent so that Australia’s low-paid workers don’t go backwards, in line with the submission lodged by the …. government”.

Australian Council of Trade Unions secretary Sally McManus, who called for a wage rise of 5.5 per cent, welcomed the increase “and the fact that the union movement has fought so hard to achieve it” but said it would continue to be a tough year ahead for workers.