A key business group wants this year’s minimum wage rise kept to 2 per cent, citing cooling inflation and sizeable pay bumps over the past two years.

The pitch puts the national employers’ association at odds with the Albanese government, which is calling for a pay increase big enough to stop the lowest-paid workers going backwards.

“We would say that a number of not greater than 2 per cent is the most that we could justify,” Australian Chamber of Commerce and Industry chief executive Andrew McKellar said in Canberra on Monday.

The Fair Work Commission is taking submissions for its annual review of minimum wages and awards.

The industrial umpire lifted wages by 5.75 per cent in June last year, citing a combination of low unemployment, falling wages and high inflation.

That took the hourly rate for millions of the country’s lowest-paid workers to $22.60.

The federal government, which will release its full submission on Thursday, has already indicated it does not want the real wages of those workers to go backwards in 2023/24.

It also specified that planned stage-three tax cuts – which take effect on July 1 – should not be viewed as a substitute for a much-needed wage boost for Australia’s lowest-paid workers.

“We don’t see cost-of-living relief as instead of decent wages growth, we want to see decent wages growth on top of the billions of dollars in cost-of-living relief that the Albanese government is rolling out,” Treasurer Jim Chalmers said.

But the government submission did not suggest wages should automatically increase with inflation across the board. And Chalmers refused repeatedly to say on Monday that the annual rise should be in line with inflation, which was most recently at 4.1 per cent.

“Low-paid workers are disproportionately impacted by these cost-of-living pressures – that’s why we want to see them earn more … so they can deal with these cost-of-living pressures in our economy,” he told Seven’s Sunrise.

“It is to make sure we get wages growing again.”

Earlier, cabinet minister Tanya Plibersek said agreed with the pay increase, saying $23 an hour wasn’t enough to live on in Australia.

But McKellar said the workplace umpire had “erred on the side of generosity” in the past two decision and inflation had since moderated.

“We need to get the balance right,” he said.

“We certainly can’t have a situation where wages continue to press higher in an environment where inflation is coming down and we don’t have the support of stronger productivity growth.”

Greens spokesperson for employment Barbara Pocock said real wages for workers in retail, hospitality and care industries had gone backwards for more than a decade.

“We need to see them be able to keep up with the runaway prices that are putting them under so much pressure,” she said.

“We need to see more justice in that labour market by raising the minimum wage.”

Since the last wage decision, economic conditions have improved.

Unemployment remains at historic lows, inflation has moderated to a two-year low at 4.1 per cent and annual real wages grew 0.1 per cent through the year to the December quarter.

Yet inflation remains above the Reserve Bank’s target band and the worst of the economic challenges are still borne by low-income Australians, the government’s wage submission warned.

The FWC will make its wages decision in coming months.

-with AAP