However, last year's 3.5 per cent increase and low inflation resulted in the biggest real increase in the minimum wage in more than a decade, surging from $US11.70 per hour in 2017 to $US12.14 in 2018.

In contrast, previous headliner Luxembourg, which also has a high cost of living, dipped from $US11.90 to $US11.82.

Australian Industry Group chief executive Innes Willox said the real wage ranking was "further evidence against the ACTU's claims that Australia's minimum wage system is not delivering for low-paid employees and needs to be overhauled".

"In fact, a person receiving a minimum wage in Australia could afford to purchase more with that wage than minimum-wage employees anywhere else in the world," he said.

Mr Willox said the Fair Work Commission needed to be "sensitive to the risk of negative impacts of high increases in the minimum wage on opportunities for people out of work and those seeking more hours of work".

"If there is a further slowing in employment growth over the period ahead, this would need to be weighed very carefully by the FWC in its next and subsequent minimum-wage decisions."

High minimum countering low wage growth


The OECD data compares countries' minimum wages by converting them into a common currency unit and adjusts for cost of living to eliminate price differences between countries.

While currency strength plays a role, the data seeks to adjust for exchange rates.

Previous data that translated 2017 minimum wages into euros also found Australia topped the world in purchasing power.

An ACTU spokesman said the OECD data did not consider the "social wage" in other countries and argued Australia's minimum wage had to do more work to help people meet their needs.

"This measure does not account for Australia's relatively lower provision of government services compared to the other countries near the top of the table," he said.

"We will continue to advocate for a fair living wage for working people."

Luxembourg, France and Germany followed Australia in the OECD rankings. The UK ranks eighth while the United States has been outside the top 10 since 2013.

Finland, Sweden, Denmark, Norway, Iceland, Austria, Switzerland and Italy do not appear in the data as they do not have minimum wages.

Centre for Future Work economist Alison Pennington defended Fair Work's recent above-inflation increases as critical to moderating the effects of record-low wage growth.

"Our research found the July 2018 minimum wage increase of 3.5 per cent was entirely responsible for the modest rebound in 2018 in the pace of overall wage growth, rising from below 2 per cent in 2017, to 2.19 per cent in 2018," she said.

"Without this minimum wage-boosting policy intervention, overall wages growth would have been below 2 per cent."