Unions say a $50-a-week increase to the minimum wage would create up to 87,000 jobs in two years.

The Australian Council of Trade Unions’ submission to a Fair Work Commission investigation of a uniform 7.2 per cent increase to the minimum and award wages says an increase would boost aggregate demand and create jobs.

The ACTU said estimates of low-income households’ spending showed between 50,000 and 57,000 jobs would be created in the first year and 30,000 in the second year.

ACTU secretary Sally McManus said; “Pay rises will create jobs and move our economy forward”.

“The Turnbull government and the business lobby are trying to keep wages down by running a scare campaign against higher wages,” she said.

“That’s the same discredited, untruthful, damaging trickle-down economics this government loves to roll out.”

In its reply, the Australian Industry Group said the ACTU claim for a $50-a-week increase is “manifestly excessive and completely unrealistic”.

“Such an increase would inflict significant harm on businesses,” it said.

“As a consequence, significant harm would be inflicted on low-paid workers, the unemployed and the underemployed, because their job security and employment prospects would be substantially reduced.”

The Australian Industry Group said that when businesses have to pay more in wages, it reduces spending and investment by employers and aggregate demand.

It said employers would offer fewer hours to workers as a result of minimum wage rises.

The Australian Chamber of Commerce and Industry said aggregated household consumption should be encouraged not by “regulated wage growth” but rather “policies that promote greater workforce participation, employment growth and a low unemployment rate”.