The Fair Work Commission has rejected an application from unions for a medium-term target to be set for the national minimum wage.
A preliminary hearing for this year's annual wage review was held in response to union proposal that a medium-term target be set.
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The minimum wage debate
Every year business, unions and politicians argue over the pay packets of lowly-paid workers - here's what the fight is all about.
A full bench of the commission on Friday rejected the submission saying it could not "bind" future reviews of the minimum wage.
The union representing hospitality workers, United Voice, the Australian Council of Trade Unions, the Australian Council of Social Service, and the Australian Catholic Council for Employment Relations made submissions in favour of a medium-term target. United Voice argued a medium-term target set at 60 per cent of median earnings in four years would provide "certainty and predictability for workers and employees".
The minimum wage is 44.8 per cent of average weekly ordinary time earnings, at $672.70 a week or $17.70an hour.
ACTU president Ged Kearney said the rejection of the proposal was disappointing because the target may have provided a clear direction for the commission in coming years.
"Our workplace relations system is supposed to work to deliver fair decisions for working people," she said.
"There is something broken when the system delivers a verdict that dismisses the concept of future-proofing wage rises for Australia's lowest paid workers.
"A four-year target would have seen weekly earnings rise to more than $860 by 2020 and helped close the gap on rising inequality in Australia."
Ms Kearney said wage growth had stalled under the Turnbull government, which "goes out of its way to push workers further down the food chain in order for big corporations to make fatter profits".
The Australian Industry Group (Ai Group) welcomed the the Fair Work Commission's rejection of the union proposal, saying it would be inconsistent with the Fair Work Act.
Ai Group chief executive Innes Willox said the target would also divert the commission from "its duty in each annual wage review to take into account the current economic and business conditions, and other relevant current factors".
The annual wage review decision is expected in early June. The new national minimum wage would take effect from July 1.
Ai Group has proposed a "modest" 1.5 per cent wage increase, which would raise the national minimum wage by $10.10 a week.
The ACTU is pushing for a $45 a week increase, saying the minimum wage has reached "dangerously low levels".
Last year's increase was 2.4 per cent, or $15.80 a week.
The Turnbull government has urged the Fair Work Commission to take a cautious approach to raising the minimum wage, warning an "excessive" pay rise may imperil job creation in a changing economy.
In its submission to the commission's annual wage review process, the government said increasing the minimum wage was "not an efficient way to address relative living standards or the needs of the low-paid".
About 196,300 people – or 1.9 per cent of employees as of May 2016 – are paid the national minimum wage rate of $17.70 an hour.
The government pointed out wage growth was subdued at 1.9 per cent, as was inflation at 1.5 per cent. The unemployment rate is 5.9 per cent, up from 5.7 per cent a year ago.
Opposition Leader Bill Shorten accused the the federal government of turning its back on Australia's lowest paid workers.
The Australian Chamber of Commerce and Industry has recommended a 1.2 per cent increase this year. This would increase the wage by $8.10 a week, bringing it to $680.80.
The Australian Retailers Association has also recommended a 1.2 per cent increase.
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