Around a quarter of a million aged care workers are set for a huge $10,000 a year pay increase in a Budget boost to be announced next week.

Treasurer Jim Chalmers is set to hand an award wage rise worth up to $200 a week  to enrolled nurses, assistants in nursing, personal care workers, head chefs and cooks, recreational activities officers (lifestyle workers) and home care workers.

The frontline workers will be given the record salary bump to battle the cost of living crisis, and is also expected to improve equal pay statistics for women.

The 'historic' 15 per cent pay rise will cost the federal budget more than $11billion, the government admitted.

The treasurer believes the huge increases will be enough to attract new staff to the industry and keep existing workers.

'Every worker deserves a fair day's pay for a fair day's work and that's what this will deliver for thousands in aged care across the country,' said Dr Chalmers.

'For too long, those working in aged care have been asked to work harder for longer without enough reward but with this Budget, that changes.

'This investment recognises the incredible contribution that aged care workers make to our economy and community and will help to create a bigger incentive for young Australians looking for a rewarding career to pick aged care in the future.'

Aged Care Minister Anika Wells said the pay boost was a 'historic and deserved pay rise for a workforce undervalued for far too long'.

'Fair wages play a major role in attracting and retaining workers to provide around the clock care for some of Australia's most vulnerable people,' she said.

'This wage decision will help more women and families to make ends meet, and ensure that quality aged care workers are less likely to contemplate leaving the sector because of pay concerns.'

The United Workers Union praised the federal government for 'living up to its promise' to fully fund the pay increase.

'The 15 per cent pay rise is a major step towards recognising the incredible sacrifices aged care workers have made,' said UWU's Carolyn Smith.

'It gives comfort that the terrible years of Coalition Government underfunding and understaffing are coming to an end.'

But the Health Care Union say 15 per cent is still not enough and wants a further 10 per cent.

The national aged care classification model price will be increased to $243.10, to cover the wages of direct care staff, including lifestyle workers.

A new $10.80 per day hotelling supplement will be established to cover the cost of pay rises for head chefs and cooks.

The value of Home Care packages will also be increased to ensure those workers can be paid the 15 per cent extra.