After the Fair Work Commission announced a 5.2% increase in Australia's minimum wage, Prime Minister Anthony Albanese welcomed the move but said the government had "more work to do" to help workers enjoy "real economic security".

Millions of low-income workers will receive an hourly rate of $21.38, up from $20.33, amounting to an additional $40 a week to help beat the impact of inflation.

The increase will enable them to take home a total of $812.60 a week. Meanwhile, casual employees covered by the wage hike will also receive a minimum 25% casual loading.

"This is great news, but it's just the beginning," the Prime Minister said on Twitter. "We have more work to do to make sure more Australians can get ahead and have real economic security."

While businesses have expressed concerns over the increase, Albanese said low-income workers "deserved a pay rise". He reminded business owners that the workers they depend on are "really struggling with the cost of living".

The dollar-an-hour increase, aimed at cushioning the impact of rising prices, protects the country's lowest-paid workers from a "real-wage cut" had the government failed to raise wages.

Read more: More Australians are finding work amid a tight job market

The decision to increase the minimum wage was prompted by the combination of rising living costs and inflation, according to FWC President Ian Ross.

"We accept that the approach we have adopted will result, albeit minor, compression in relativities," Ross said. "But that consideration is to be balanced against the need to provide greater relief to low-paid workers in the context of rising cost-of-living pressures."

Considering the strength of Australia's labour market, the wage hike won't likely have a "significant adverse effect" on the economy, he said, as quoted by 9News.