Bill Shorten plans to raise the minimum wage and has promised a new “living wage” if Labor wins the May federal election.

The Labor leader would give the Fair Work Commission powers to overhaul the minimum wage, for the 1.2 million Australians on approximately $37,000.

Secretary of the ACTU Sally McManus told Neil Mitchell it’s not exactly what the union wanted, but they believe raising wages would have flow-on positive effects for businesses.

“One side of the argument is that when you raise those wages, those workers spend the money, and that increases revenue for businesses,” Sally said.

“There’s been arguments that whether in the end it leads to increased prices or job losses.”

“What we wanted is for it to be pegged at 60 per cent but that’s not something that they’ve accepted, they’ve said that they want the Fair Work Commission to do an examination of that, and we think that’s fair.”

But Australian Chamber of Commerce CEO James Pearson said ultimately employers will pay.

“The union movement likes to go on about trickle down economics,” he said.

“This idea that you can force small businesses to pay wages that they can’t necessarily afford, and somehow by magic that’s going to be spent on the same small businesses and everything will be fine.”

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“I would believe any increase for lower income wage workers, you can argue it but it’s going to be inflationary, and therefore workers who don’t get it, on 50, 60, 70, are going to effectively cop a pay cut,” Neil said.