Prime Minister Scott Morrison says he fears that workplace conflict will arise if companies have to publicly disclose how much they pay women compared to men.
The opposition on Sunday announced an election commitment to make Australian companies with more than 1000 employees disclose their gender pay gaps.
Mr Morrison says it's important to reduce the 14.5 per cent gender pay gap, but thinks Labor's policy will pit workers against each other.
"I want policies that bring Australians together. I don't want to create tensions and anger and anxiety in the workplace," he told reporters in Sydney on Sunday.
"You'd want to be confident that you weren't just going to be setting up conflict in the workplace, what matters is narrowing the pay gap."
The gender pay gap in Australia had reduced from 17.2 per cent to 14.5 per cent under the Liberal government and was trending downwards, he added.
Labor says the gender pay gap is "stubbornly high" and women working full time still get paid almost 15 per cent less than men working full time.
"It's even higher for women in some managerial positions or in some industries," deputy Labor leader Tanya Plibersek told reporters on Sunday.
"We think it's just not fair that a full-time working woman earns about $27,000 a year less than a full-time working man."
A Labor government under Bill Shorten would also change the Fair Work Act to prohibit pay secrecy clauses, which prevent employees from discussing their salaries.
"The industries that most commonly use pay secrecy clauses also have some of the largest gender pay gaps," Ms Plibersek said.
Philippa Hall of the Women's Electoral Lobby says Labor's policy provides hope for the future, with the pay gap staying around 15 to 17 per cent over the past 30 years.
Companies already report their gender pay data to the Workplace Gender Equality Agency, but making the information public is the first step to narrowing the gap, Labor says.
The Workplace Gender Equality Agency would have to publish a list showing whether large companies had undertaken and reported a gender pay gap audit.
The policy is an important step towards fair pay for women, says the Australian Council of Trade Unions, as it will ensure that employers won't be able to punish their employees for discussing pay with each other.
All Australian government departments and agencies would also have to conduct gender pay audits within the first year of a Labor government.
Australian Associated Press