SYDNEY: Prime Minister Anthony Albanese said on Friday he would welcome lifting the minimum wage to match inflation, although his government's submission to an independent wage-setting body did not go so far as to recommend a specific increase.

The government submission recommended real wages for low-paid workers "do not go backwards" but added it was not suggesting wages should "across-the-board" automatically rise with inflation.

Changes to the national minimum wage are reviewed annually by the independent Fair Work Commission (FWC), which last year delivered an increase largely in line with inflation. The Australian Council of Trade Unions has called for a 7% increase to match inflation again.

"If the Fair Work Commission makes that decision then I would welcome it, but it is an independent decision of government. It's up to them to determine the range of factors they'll consider," Albanese told ABC Radio.

"My values haven't changed," he said.

An inflation-matching wage bump could further fuel inflation, complicating the job of the Reserve Bank which is expected to pause rate hikes at its meeting next Tuesday. Prices eased to 6.8% in the year to February, the slowest pace since June last year.

Governor Philip Lowe said this month that the risk of a prices-wages-spiral remained low but the bank was alert to the risk given tight labour markets and high prices. The wage price index rose 3.3% in the December quarter versus a year earlier, compared to 7.8% for inflation over the same period.

The FWC decision, expected in June, also covers minimum wages and conditions for specific industries and occupations, known as awards. Roughly 2.7 million Australians are covered by awards, compared to around 180,000 on the minimum wage.

Catherine Birch, a senior economist at ANZ, said the FWC would likely lift the minimum wage further than award wages, given the latter's broader reach. She expected award wages to rise around 4.6%, similar to last year.

"We're expecting this will be one contributor to accelerating wage growth through this year and into 2024," she said.

The Australian Chamber of Commerce and Industry submission on Friday called for an increase in minimum and award wages of up to 4%, which included a legislated 0.5% increase in mandatory pension savings.

 - Reuters