Family First senator Steve Fielding attacked the rise as ''a slap in the face'' for ordinary Australians and said he was ''gobsmacked'' as to how it could be justified.

Workplace Relations Minister Julia Gillard defended the rise as a one-off adjustment required to alter the way senior public servants were paid.

Ms Gillard said , ''If you're going to have quality public servants who feel free to say to government what they genuinely think, then you need to have a system that doesn't make part of their pay dependent on pleasing the Government.''

In contrast, about 1.3 million low-wage workers dependent on federal awards will benefit from yesterday's Fair Pay Commission decision which will raise the minimum wage to $543.78, or $14.31 an hour, up from $522.12 ($13.74 an hour) for a 38-hour week.

It is the commission's third annual minimum pay decision and is just over twice last year's rise of $10.26 but falls short of the $27.30 awarded in 2006.

Fair Pay Commission chairman Professor Ian Harper said low-income earners had been affected by rising consumer prices but the increase, coupled with the tax and transfer payments announced in May's federal budget, would increase their readily disposable incomes.

A worker on the minimum wage would receive a tax cut of $8.65 a week in addition to the $21.66 wage increase, while a federal award employee on $676.42 a week would receive the pay rise and a tax cut of $20.19 a week.

Although the ACTU had sought $26 a week, secretary Jeff Lawrence said it would provide some relief for families affected by spiralling petrol, housing and grocery costs but would not make up for the decline in living standards experienced under WorkChoices.

''Almost two-thirds of award-dependent workers have suffered a decrease in their real earnings as a result of the first two determinations by the commission before today,'' Mr Lawrence said.

But employers warned that the increase would lead to prices being passed on to consumers.

The largest employer group, the Australian Chamber of Commerce and Industry, branded the rise ''economically risky'' and predicted it would add $32,000 to the cost of creating a job.

The chief executive officer of the Council of Small Business of Australia, Tony Stephen, said the rise was reasonable but under the pressures of inflation his members would have to pass it on to the consumer.

''The amount awarded is immaterial, but the fact that it simply compensates for price increases shows the Reserve Bank of Australia that there is still a problem with inflation in this country,'' Mr Stephen said.

By contrast, Westpac senior economist Anthony Thompson said the decision would have only a ''slight'' impact on overall wages growth.

Australian Industry Group chief executive Heather Ridout warned that the increase was on the ''high side'' of expectations and would add to business pressures.

She forecast that the rise of $21.66 a week would translate to about $27 in on-costs to employers.