Minimum pay battle heats up between unions and business

UNIONS are pushing for the minimum wage to be increased by $27 a week, while business wants only a $5-a-week raise in submissions to the annual wage review.

The Fair Work Commission's annual wage review comes as the Productivity Commission also examines it, despite Abbott government pledges not to act unless it is re-elected.

Submissions from the Australian Council of Trade Unions and Australian Chamber of Commerce and Industry were released on Friday.

The union council has urged the FWC to increase the pay packet for the nation's lowest-paid workers, currently $640.90 a week, arguing the wage was now at record lows, at 43% of average male weekly earnings.

But the ACCI, representing small and medium businesses, has urged the commission to raise the wage by $5.70 a week at most, reiterating its argument higher wages could increase unemployment.

ACTU secretary Dave Oliver said the pay rise was essential to avoid "creating an underclass of working poor", saying there were already signs many were suffering from financial stress and poverty.

He said the annual wage review was the "only chance" for more than 1.8 million Australians on the minimum wage to get a pay rise.

The ACTU also has called on the commission to increase superannuation contributions for those on minimum wage by 0.5%, to 10%.

But ACCI chief executive Kate Carnell said the commission needed to take a "cautious and restrained approach" to pay rises, due to the softening labour market and employment growth slowing.

She said the nation was going through "difficult economic times" and urged the commission to ensure it considered the impact of falling commodity prices and a fall in the terms of trade.

Ms Carnell said the combination of minimum wage and "excessive" penalty rates for casual weekend and night workers were already hitting small businesses.

The commission's annual wage review will look at other award wages during its four-month-long inquiry, expected to be completed in June.

A final decision is expected later this year on all award wages from July 2016.

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