QMV principal consultant Jonathan Steffanoni said broad assertions that the planned increase in SG will add to the cost of living pressures faced by many Australians don’t really stack up to closer scrutiny.
“This may simply be due to misunderstanding of the complexity and nuance in the way the SG and labour markets function,” Mr Steffanoni said.
The current rate for SG payments made by employers is 9.5 per cent, with this rate set to continue until 1 July 2021 when it increases to 10 per cent, before settling at 12 per cent from 1 July 2025.
Last week, the Grattan Institute released research suggesting that lifting compulsory superannuation contributions to 12 per cent would cost the average 30-year-old Australian worker $30,000 over their lifetime.
Mr Steffanoni said that rather than adding to cost of living pressures by reducing take-home salary, an increase in SG for the 23 per cent of Australian workers on lower salaries set by modern awards will increase the retirement savings of those who are set to benefit most, as wages aren’t set by the market and provide for SG in addition to salary.
“Young Australians early in their careers and workers in lower-paid industries often face the most pressing cost of living challenges, and it would be this demographic to benefit most from an increase in the SG,” he noted.
“As casual employees on monthly incomes of less than $450 are not covered by the current SG system, they would also benefit from an increase in the SG and the removal of the $450 rule.”
Mr Steffanoni conceded, however, that some of the workers on individual employment agreements, which accounts for 37 per cent of the workforce, that rely on a total remuneration package, inclusive of SG, could see a direct reduction in their take-home pay with an SG increase.
However, a vast majority of the 40 per cent of workers covered by a collective agreement would be unlikely to see a direct reduction, he said.
Mr Steffanoni also emphasised that the salary of employees on individual or collective agreements often falls below market value, particularly where employees remain in the same role or with the same employer for a longer period.
“There may be pay increases, but these typically don’t keep pace with the market,” he said.
“An increase in the superannuation guarantee is a blunt but effective mechanism to force improvements in labour market efficiency in times of low unemployment and wage growth — times such as those we are currently experiencing,” he said.
