Record pay rise on the cards for Australia's lowest-paid workers

A record pay rise may be on the cards for Australia's lowest paid workers as the Fair Work Commission weighs up a new minimum wage. 

Unions are pushing for a $57 a week wage increase, but business groups warn that could see stores close.

"We want to see wages moving again in this country in responsible, sustainable, meaningful wages," Treasurer Jim Chalmers said today.

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"It's just common sense to begin with the lowest paid Australians."

On July 1 the new minimum wage rate will kick in for nearly 200,000 Australians. 

If the unions' proposed seven per cent is accepted, that rate will grow from $21.38 an hour, or $812.60 per week, to $22.88 an hour and $869.44 per week.

"We're asking for this because it is a survival cost of living pay increase," ACTU President Sally McManus said.

The government will back the rise for minimum wage workers but may look at a different increase for the millions of Australians on awards.

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"I think businesses recognise if they want to hold onto the best people at a time of skills and labour shortages, then they need to pay for them," Chalmers said.

Shadow Home Affairs Minister Karen Andrews agreed, saying: "that is a focus of everyday Australians.

"They do need more money because the cost of living is out of control in this country," she added.

Business groups are also proposing a pay rise but at half the rate.

"It's responsible, it's fair, it's good for the economy. If we push too far the risk is we'll do damage," Australian Chamber of Commerce and Industry chief executive Andrew McKeller said. 

For small businesses the challenge is to meet rising interest and supply payments while also meeting rising wages, with the result likely meaning price hikes for consumers.