The union movement is demanding a dramatic shakeup of the way employees can negotiate pay and conditions, seizing on concerns over sluggish wage growth and fuelling debate about Australia's industrial relations landscape months out from a federal election.

Australian Council of Trade Unions (ACTU) secretary Sally McManus will outline the plan in Melbourne tonight, in what she is describing as reforms the, "nation needs to once again be the land of the fair go".

The plan focuses on allowing workers to engage in sector or industry bargaining — negotiating pay and conditions based on the type of work someone does or the site where they work, rather than just with their direct employer.

"The enterprise-only bargaining system is failing," Ms McManus is expected to say in an address to the John Curtin Research Centre.

"More and more people are falling out of it and the pay increases it delivers do not reflect productivity increases.

"There are 750,000 fewer workers under enterprise agreements now today than when the Abbott-Turnbull-Morrison Government first came to power."

The ACTU argues it is an approach that has been adopted in countries such as Germany and Denmark, contributing to higher productivity and wage equality.

Wage growth remains sluggish, at near record lows, and has been one of the key issues the unions and Labor have attacked the Coalition on every time the Government spruiks strong economic data.

"While enterprise bargaining did assist for some time achieving productivity improvements, these productivity improvements have been exhausted at the enterprise level," Ms McManus is expected to say.

"Now bargaining has become an almost ritualised period of conflict over wages or, from the perspective of workers, fights to resist the pressure to further cut wages and job security.

"There is now little talk about productivity or innovation as this cannot be seen outside the narrow focus on wages and wage competition."

Ms McManus will also call for an independent umpire to help resolve bargaining disputes and ensure a "living wage", or wage that takes into account the minimum cost of living, rather than the "economic minimum wage".

It is understood that could come about by tweaking the remit of the existing Fair Work Commission, or creating a separate organisation with more of a focus on employees.

The Coalition has long argued the union movement and Federal Opposition risk Australia's economic prospects by putting excessive strain on employers, particularly small businesses.