Factory worker Jafet Montero is one of Australia’s lowest paid workers and is currently living in his car.

With the cost of food, rent and utilities continuing to rise, Mr Montero says he is struggling to survive, let alone make ends meet on the minimum wage.

‘Right now, it’s very sad. I’m sleeping in the car.’

Mr Montero says the Fair Work Commission’s decision on Friday to raise the minimum wage by 3.5 per cent to $719.20 a week, or $18.93 an hour, was disappointing.

Speaking to a crowd of union members gathered outside the commission’s Melbourne office, he said the rise equated to just 64 cents per hour.

‘For living standards, it is not enough,’ he said.

‘The poor people are becoming poorer and the rich are becoming richer. We were expecting more.’

Australian Council of Trade Unions secretary Sally McManus said the decision was a step in the right direction, but will still leave some full-time workers struggling.

‘It is a step forward towards a living wage, but it’s not a living wage,’ she told reporters.

‘We need in our country for no full-time worker to live in poverty.’

Unions had called for a $50 rise, but the Fair Work Commission panel believed such a rise could adversely impact employment.

‘Such adverse effects will impact on those groups who are already marginalised in the labour market and on households vulnerable to poverty due to loss of employment or hours,’ President Justice Iain Ross said.

However, the Australian Chamber of Commerce and Industry said Friday’s wage rise was enough to discourage small businesses.

‘This minimum wage increase will intensify pressure on people running small businesses, many of whom are already struggling,’ CEO James Pearson said in a statement.

‘Businesses which can’t pass on such significant rises to customers will have to cut hours, cut jobs or both.’

The Australian Industry Group said the increase – which the Fair Work Commission called modest – was ‘excessive’ and well above inflation.

‘For the many thousands of small and medium-sized businesses responsible for the bulk of employment in Australia, a 3.5 per cent increase in the costs of employment is anything but modest,’ chief executive Innes Willox said.