Prime Minister Scott Morrison is blaming Australia's cost of living crisis on inflation, which he says is outside his control.
But wages are lagging well behind the inflation rate, data from the Australian Bureau of Statistics shows.
The annual rate was 2.4 per cent, less than half the rate of inflation at 5.1 per cent, according to the figures released on Wednesday.
Opposition Leader Anthony Albanese said good government helps wages to rise, not fall backwards.
Australian workers are paying for a decade of bad policy and economic failures, he said.
"What a hit. This delivers the biggest cut to real wages in more than 20 years," he told the National Press Club on Wednesday after the wages data was released.
"Under Scott Morrison, real wages are plummeting while the costs of living are skyrocketing."
But Mr Morrison said low unemployment would lead to increases in wages.
"But inflation is the challenge and that's why when you're dealing with things like that you've got to know the things you can't control: global events, global forces, wars in Europe, disruptions of supply chains and the pandemic," he said during a speech in Melbourne.
Australians could not risk electing an opposition whose policies would drive up inflation, the prime minister said.
"A shadow treasurer who thinks you can just have a few billion dollars loosely spraying around and it's no big deal, well, that is a big risk to you," he said.
But Mr Albanese said Labor's policies put productivity at the centre of increasing profits and wages without adding to inflation.
Meanwhile, the wages data showed workers were set to lose $4000 in 2022, the peak body for Australian unions said.
"Working Australians are being forced to cut back on even the most essential items," Australian Council of Trade Unions secretary Sally McManus said.
"It is shameful that the Morrison government is refusing to support a $1 per hour for workers on the minimum wage."
The Fair Work Commission is reviewing the minimum wage rate, which Labor wants to keep pace with the rate of inflation.
Labor campaign spokesperson Tony Burke said without a change of government on Saturday he would not expect Australians to get a wage rise.
"The government wants to keep wages low. What we will do ... is at every turn where we're able, help with putting upward pressure on wages," he told reporters in Canberra.
Labor is due to release election policy costings on Thursday and shadow treasurer Jim Chalmers said the prime minister was not being honest about what they would show.
"If this government spent as much time on their own budget as they spend making up stories about ours, then maybe they would have something to show for the trillion dollars in debt they've racked up in their budget heaving with rorts and waste," he told AAP.
The government's costings, released on Tuesday, total $2.3 billion and will be paid for by increasing the public service efficiency dividend to two per cent, from 1.5 per cent, which will raise about an extra $1 billion for a total of $2.7 billion.
Nearly six million Australians have already cast their vote or applied for a postal vote.
Meanwhile, two new polls show the election race has tightened in the coalition's favour ahead of voting day on Saturday, although Labor is still ahead on a two-party preferred basis.
A Resolve Strategic poll conducted for Nine newspapers shows Labor leads by 51 per cent to 49 per cent, compared to 54-46 two weeks ago.
An Essential poll published by The Guardian on Wednesday found Labor was on 48 per cent compared to 46 per cent for the coalition, against 49-45 a fortnight ago, with the remainder of voters undecided.
Australian Associated Press
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