Millions of workers covered by awards and minimum rates of pay will be hoping for a sizeable wage boost this year to help cover cost of living pressures that are only recently starting to ease.
The annual wage review debate has kicked off this week with the federal government calling for a pay increase big enough to stop the lowest-paid workers going backwards.
Prime Minister Anthony Albanese said those on the minimum wage should not fall behind.
"Our submission this week will be consistent with that," told parliament on Monday.
The Fair Work Commission is hearing from governments, unions and employers for its annual review of minimum wages and awards and the Labor government has already released some key details of its submission.
Last year, the workplace umpire lifted wages by 5.75 per cent, citing a combination of low unemployment, falling wages and high inflation for the sizeable boost.
Inflation remains above the two-three per cent target range but has moderated since its peak of 7.8 per cent in late 2022, lifting 4.1 per cent in the 12 months to December last year.
Given the progress on inflation and sizeable minimum wage bumps over the past few years, a key employer group wants the commission to stick with increases of no more than two per cent.
"We would say that a number of not greater than two per cent is the most that we could justify," Australian Chamber of Commerce and Industry chief executive officer Andrew McKellar told reporters in Canberra on Monday.
Mr McKellar said the workplace umpire had "erred on the side of generosity" in the past two decisions and inflation had since moderated.
"We need to get the balance right," he said.
"We certainly can't have a situation where wages continue to press higher in an environment where inflation is coming down and we don't have the support of stronger productivity growth."
The prime minister said lifting the minimum wage was not at odds with moderating inflation and Australia was actually experiencing real wage growth, cooling price pressures and falling unemployment at the same time.
Still, the draft government submission released on Monday suggests wages should not automatically increase with inflation across the board.
It also says the planned stage three tax cuts should not be viewed as a substitute for a much-needed wage boost for Australia's lowest-paid workers but in addition to it.
Nationals MP Barnaby Joyce said setting minimum wages was part of the process but it was important to get the fundamentals right on job creation and a strong labour market.
"I'm asking for a fulsome delivery of that rather than just this sort of window‑dressing," he told Channel Seven's Sunrise.
"You've got to do the whole thing, you've got to get them a job"
Greens employment spokeswoman Barbara Pocock said real wages of workers in retail, hospitality and care industries had been going backwards for over a decade.
"We need to see them be able to keep up with the runaway prices that are putting them under so much pressure," she said.
