Finance Minister Mathias Cormann has flagged lower wage growth as the jobless rate soars during the coronavirus recession.

Treasury’s economic update predicts the unemployment rate will peak at 9.25 per cent, sending a further 240,000 Australians into the dole queue.

Senator Cormann said there was a high level of uncertainty in the global and domestic outlook.

“Clearly when the unemployment rate goes up, wages growth will be less,” he told the ABC on Friday.

“There is likely to be lower wages growth at a time of comparatively higher unemployment but there’s also going to be a lower rise in cost pressures.”

Australian Council of Trade Unions secretary Sally McManus said sluggish wage increases were already an issue before the pandemic.

She believes the government and the public should open their wallets to stimulate the economy during the downturn.

“Everyone that does have a job and does have a secure job, they’ve got an obligation to spend their money because that’s going to support jobs,” Ms McManus told the ABC.

Unions are also calling for paid pandemic leave to allow workers to isolate without financial penalty.

“That is one way of controlling the virus because people know that they can safely isolate and they’re going to be supported, they won’t lose their pay,” Ms McManus said.

The budget update also revealed the country has plunged more than $850 billion into debt and will be $184.5 billion in deficit by the end of this financial year.

Leading credit agencies Moody’s and Standard and Poor’s don’t expect the economic beating to jeopardise Australia’s AAA rating.

Treasurer Josh Frydenberg will outline the size of the economic task ahead in a speech to the National Press Club on Friday.

Mr Frydenberg argues the government will need to enable growth to help the country emerge from the fiscal ruins.

“This time, while we will continue to provide fiscal support through the crisis, sustainable growth will only come from creating the most dynamic and flexible economy we possibly can,” he is expected to say.

Labor accused the government of failing the 240,000 people who will find themselves out of work in the coming months.

“A crisis of this magnitude requires the government to step in to support people and to support their jobs,” shadow treasurer Jim Chalmers said.