But they say the Fair Work Australia ruling, handed down last Wednesday, could lead to job losses or service cuts if the state government doesn't commit to extra funding to offset the wage rise.

The decision delivers wage increases of 19-41 per cent on top of annual growth over the next eight years.

It has been hailed as a win for underpaid women, in particular, and marks a significant step in reducing the gender pay gap.

The Australian Services Union lodged the case in March on behalf of 150,000 of Australia's lowest-paid workers, 120,000 of them women.

For this group, the new pay rates boost average salaries from $42,000 to $56,500 a year.

Youth worker at Good Shepherd Youth and Family Services in St Albans, Sandra Di Giantomasso, said the decision would benefit disadvantaged Brimbank residents.

"We have had a large staff turnover in recent years because the pay is so low," she said.

"This decision will mean we can keep people with experience working in the local area."

ASU state branch secretary Lisa Darmanin said the decision gave workers recognition after years of appalling pay.

But she warned of possible job losses or service cuts unless the state government increased community service funding.

"We now need Premier Baillieu to put his money where his mouth is on valuing women's work here in Victoria."

The Salvation Army's Major Andrew Craib said the decision could have major ramifications for charitable organisations like Sunshine-based Westcare.

"We fund a lot of our employment positions ourselves, so we are still unsure about how we are going to meet those pay commitments."

While Prime Minister Julia Gillard and Employment Minister Bill Shorten praised the unions involved, the state government released a statement arguing the decision had major financial and service provision implications for Victoria.

"We have always said we support the vital work that is performed by community sector workers, and we support the principle of equal pay for work of equal or comparable value."

The state government took a thinly veiled swipe at "the Commonwealth's role in this case" and demanded a federal commitment to meet the "very heavy costs" imposed on state governments and non-government organisations.

State Opposition Leader Daniel Andrews said Victoria was the only state not to commit to funding the pay increase.

The state government has commited $200 million over four years but refuses to say whether it will fund the full increase.