Retailers are asking for the minimum wage to be increased by less than the inflation rate a month after winning a reduction in Sunday penalty rates.

The Australian Retailers Association has recommended a 1.2 per cent increase in the national minimum wage in response to a fragile labour market. This would translate to an increase of $8.10 per week, bringing it to $680.80. The increase does not keep up with inflation which means it would effectively be a reduction in real wages.

In contrast, the ACTU will seek a $45 per week increase in the minimum wage, with secretary Sally McManus saying a sharp jump is needed with the minimum wage at "dangerously low levels."

In its submission to the Fair Work Commission, the retailers' association said the workplace umpire had been generous in the past "given the faltering economy and slow pace of growth across key sectors, rising unemployment, weak jobs market, global risks, rising business costs and increased global competition through the rising dollar".