The federal government has made a submission to the fair work umpire advocating for a significant and meaningful wage increase for aged care workers.
The Fair Work Commission is determining whether to lift pay rates for the aged care sector, with personal care workers on a starting rate of $23.55 per hour and qualified personal care workers earning $24.76.
The government has pledged to fund the pay increase based on the commission's determination.
While unions are asking for a 25 per cent rise for aged care workers, Acting Prime Minister Richard Marles said the exact number is for the independent commission to decide.
Fairness and practicality should be taken into account when deciding wages to attract more workers to the sector, he said.
"We've got a real issue in retaining people in aged care and encouraging people to work in aged care and if we want to do that going forward people need to be paid a proper wage," he told Brisbane radio station 4BC on Monday.
"That requires a meaningful increase in what they're currently paid."
The government made its submission to the commission on Monday which was welcomed by the Health Services Union and the Australian Nursing and Midwifery Federation.
"After a decade of neglect the new government's recognition of the aged care workforce is a shot in the arm," HSU national president Gerard Hayes said.
"Older Australians will not get the care they deserve until we can attract and retain a workforce to look after them. The government has understood this and taken action."
Current award rates do not adequately reflect the value of aged care workers, ANMF federal secretary Annie Butler said.
"The nature of the work required across the aged care sector has developed considerably over the years and become significantly more complex, requiring greater skill and responsibility under increasingly difficult conditions, with a diminishing workforce," she said.
The government's submission said a 25 per cent increase to wages could boost the labour supply in the sector by up to 10 per cent over the next five years.
But the Treasury estimates such a rise would increase wages across the economy by less than one per cent, which could lead to a flow-on effect for similar areas.
"In the current economic environment of above-target inflation and persistent global price shocks, there would be risks to inflation expectations if similar wage rises are demanded in associated industries," the submission said.
The acting prime minister will meet with Aged Care Minister Anika Wells during a visit to Brisbane on Tuesday.