Unions insist Australia's lowest paid workers need an extra $27 a week to avoid becoming part of an underclass of working poor.
But business says this would stifle jobs growth in a softening labour market, and it supports an increase to the minimum wage of just $5.70.
Both the Australian Council of Trade Unions and the Australian Chamber of Commerce and Industry have lodged submissions to the Fair Work Commission's annual wage review.
The minimum wage is now $640.90 a week, after the commission approved an $18.70 increase in 2014.
ACTU secretary Dave Oliver said this represented a record low of 43.4 per cent of current average weekly full-time earnings.
"There are already signs that Australia is developing a working poor with financial stress, deprivation and poverty on the rise among low-paid workers," Mr Oliver said.
"A $27 per week pay rise for our lowest paid workers is essential if Australia is to avoid creating an underclass of working poor."
The ACTU's sought-after increase would take the minimum wage to $667.90 per week, while the ACCI wants $646.60. The gap is $21.30.
ACCI chief executive Kate Carnell said wage growth across the economy was at a record low, showing that employers lacked the capacity pay large increases.
The impact on business costs was always greater than the baseline minimum wage increase, as penalty rates were calculated on top of this.
Ms Carnell also said unemployment was at a 12-year high and this had the greatest impact on young unemployed, low-skilled and low-paid workers.
This year's Annual Wage Review comes at a time of softening labour market conditions, she said.
"We must be careful that the minimum wage does not exacerbate the risk of unemployment for those most vulnerable in the labour market."
About 1.86 million Australians are paid the national minimum wage or an award minimum wage.
Social Services Minister Scott Morrison refused to say if the government would back the $27-a-week claim, adding that it would be guided by the commission.
"I'll leave that to the appropriate process, which is an independent process, to settle those matters," Mr Morrison told reporters in northern Tasmanian on Friday.
He added that Employment Minister Eric Abetz will make "appropriate representations" on behalf of the government when the time is right.
Ahead of the May budget Mr Morrison said the government's focus is on getting as many people as possible into the workforce.
Share
