Some independent retailers may be forced to close because they cannot afford to pay the three per cent increase in minimum wages, an employer group says.
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But unions say many low-paid workers will also continue to struggle to make ends meet after being awarded a lower wage rise this year.
MGA Independent Retailers CEO Jos de Bruin said the three per cent wage rise was a serious blow to the survival of the independent retail industry, coming on top of a 3.5 per cent increase last year and 3.3 per cent in 2017.
Mr de Bruin said most independent supermarkets, liquor stores, timber and hardware retailers were owned by families who work long hours to make a small profit.
"This new rate will cause serious damage to their sustainability and many will have no alternative but to close their doors," he said in a statement.
Other business groups also warned small businesses would struggle to pay the extra $21.60 a week to their employees, estimating it will cost all employers an additional $3.1 billion a year.
Australian Retailers' Association executive director Russell Zimmerman said he hoped the Fair Work Commission decision would not lead to more retailers closing.
"There are a large number of very small retailers who, in actual fact, cannot draw a proper wage out of their business, business owners who live from hand to mouth," he told reporters.
"This decision will make it very difficult for some small retailers who are probably living as close to the breadline as anybody could."
The United Voice union said an extra 57 cents an hour will make no meaningful difference to cleaners and aged care, hospitality and retail workers struggling to pay bills and make ends meet.
"What it does mean is continued inequity and struggling to get by," its national secretary Jo-anne Schofield said.
The SDA union's national secretary Gerard Dwyer said while the wage increase would provide a much-needed boost to take-home pay, retail and fast food workers were still being left behind.
"With historic low wage growth and coming cuts to penalty rates, there's no doubt many workers will continue struggling to make ends meet," he said.
Small Business and Family Enterprise Ombudsman Kate Carnell said the wage rise would affect small businesses, but backed the independent process behind the decision.
"The increase awarded exceeds inflation, and that will impact small businesses, many of which are doing it tough right now," she said.
Australian Associated Press
