Industry groups and unions continue to be at odds on how much the minimum wage should increase, following a federal government's submission to the Fair Work Commission.
The new Labor government urged the commission to ensure the wages of low-income workers do not go backwards in its submission to the body.
The government said wages of low-paid workers should increase amid rising inflation levels.
"In considering its decision on wages for this year, the government recommends the Fair Work Commission ensures that the real wages of Australia's low-paid workers do not go backwards," the submission said.
"High and rising inflation and weak wages growth are reducing real wages across the economy and creating cost of living pressures for low-paid workers."
While the submission did not say how much the minimum wage should rise beyond its current level, the consumer price index has risen to 5.1 per cent. That's 2.7 percentage points higher than wages growth.
Unions welcomed the submission from the government.
"It is a huge shift to have a government that accepts that there is a problem with wage growth in this country and is willing to do something about it," Australian Council of Trade Unions secretary Sally McManus said.
"Workers' share of national income is at a record low right now while productivity is strong and profits are at record highs - we urgently need wage growth for working people and this is a great first step."
The ACTU had previously called for a 5.5 per cent rise in the minimum wage, above current inflation levels.
However, the Australian Chamber of Commerce and Industry said in its updated submission to the Fair Work Commission a three per cent rise would be reasonable.
"This gets the balance right, taking into account the full range of risks and uncertainties facing the Australian economy, workers and businesses," the submission said.
"If the wage increase exceeds the moderate levels that balance what businesses can afford and community expectations, jobs and businesses will be lost."
The Australian Industry Group warned against the large increase proposed by the unions in its updated submission.
"The ACTU has proposed a wage increase of 5.5 per cent. Such an increase would add substantially to the risks of entrenching inflation and greater increases in interest rates," the submission said.
The commission is expected to announce its decision by the end of the month.