Invest
No trade-off needed between superannuation and wage growth
The very real issue of record-low wage growth would not be fixed by canning planned increases to compulsory superannuation contributions by employers, a new study has indicated.
No trade-off needed between superannuation and wage growth
The very real issue of record-low wage growth would not be fixed by canning planned increases to compulsory superannuation contributions by employers, a new study has indicated.
In a new research paper from the director at the Australia Institute’s Centre for Future Work, Dr Jim Stanford outlined that “the assumption of a one-to-one trade-off between superannuation contributions and wage growth is not credible”.
Dr Stanford, who is also an economist, began by critiquing arguments against the scheduled superannuation guarantee increases, which are expected to gradually move towards 12 per cent in five annual stages beginning 1 July 2021.
Former prime minister Paul Keating, the man behind the advent of Australia’s compulsory superannuation scheme, has previously publicly slammed a number of politicians who voiced opposition to such increases.
Dr Stanford argued that “proponents of this view are exploiting widespread concern over the current historically low pace of wage growth, to argue that workers should forgo promised improvements in superannuation to supplement their (disappointing) current incomes”.
Cancelling planned increases to the superannuation guarantee would not shift income from employers to workers, he indicated.
Instead, it would almost certainly lead to “even further reduction in overall labour compensation relative to GDP”.
The paper drew its conclusions from economic statistics, and found that on average, wages are more likely to accelerate and grow at a faster rate when the superannuation guarantee rate was increased.
“More realistically, when wages are understood as the outcome of normal and ongoing regulatory, institutional and bargaining processes (rather than determined by competitive market clearing), there is no reason to expect any automatic trade-off between wages and superannuation contributions,” the report said.
This is when Dr Stanford made the statement that “record-low wage growth will not be ‘fixed’ by giving up planned increases in compulsory superannuation”.
Instead, he pointed out that Australians who are concerned by the real issue of weak wage growth should support measures that would directly tackle that problem.
On this issue, the economist called for a higher minimum wage, an expanded mandate for Modern Awards, the revitalisation of collective bargaining, and the alignment of fiscal policy with the goal of stronger wages.
About the author
About the author
Economy
Will Morrison commit to net zero by 2050?
Prime Minister Scott Morrison has yet again played down the impacts of climate change, referring to net zero as an aggressive and frustrating target. ...Read more
Economy
Consumer confidence holds ahead of reopening
The battle between consumer confidence and caution looks to be on a knife’s edge in the coming weeks. ...Read more
Economy
Unemployment fell again in August, but not for good reasons
Employment and hours worked fell nationally in August, with NSW leading the pack. ...Read more
Economy
ACCC steps in on Qantas-Japan Airlines partnership
Australia’s competition authority says that the short-term benefits of a new partnership between Qantas and Japan Airlines don’t outweigh the long-term costs to competition in the sector. ...Read more
Economy
NAB optimistic on jobs market despite another payroll miss
NAB has expressed confidence in the short-term future of the Australian jobs market, despite payroll jobs decreasing by 0.7 of a percentage point in the last fortnight, following a drop of 1.8 per ce...Read more
Economy
New and improved takeover bid sees Sydney Airport open books
The Sydney Aviation Alliance consortium, led by the IFM Investors, has been granted access to Sydney Airport books after submitting a revised acquisition proposal. ...Read more
Economy
ACCC cites LCR as it gives payment processing merger the go-ahead
The local competition watchdog has given its approval of a merger between three major players in Australia’s payment processing sector. ...Read more
Economy
Unemployment at 9.5% in August as lockdowns squeeze labour
August was the first time since the first half of 2020 that Australia’s workforce contracted for two months in a row. ...Read more
What to expect as the end of lockdown looms? Will the Stage 2 tax cuts boost your tax return? Where should investors be looking as the economy reopens?
Listen now
Could property prices inflate by another 20%? What’s happening in recent dividend announcements? Did your fund fail the YFYS test?
Listen now
What does the NSW regional permit mean for property investors? Who really wins from the BHP-Woodside merger?
Listen now
The sea and tree-change norm; Square’s acquisition of Afterpay; Why you should think twice before turning to TikTok for advice
Listen now
Economy
Will Morrison commit to net zero by 2050?
Prime Minister Scott Morrison has yet again played down the impacts of climate change, referring to net zero as an aggressive and frustrating target. ...Read more
Economy
Consumer confidence holds ahead of reopening
The battle between consumer confidence and caution looks to be on a knife’s edge in the coming weeks. ...Read more
Economy
Unemployment fell again in August, but not for good reasons
Employment and hours worked fell nationally in August, with NSW leading the pack. ...Read more
Economy
ACCC steps in on Qantas-Japan Airlines partnership
Australia’s competition authority says that the short-term benefits of a new partnership between Qantas and Japan Airlines don’t outweigh the long-term costs to competition in the sector. ...Read more
Economy
NAB optimistic on jobs market despite another payroll miss
NAB has expressed confidence in the short-term future of the Australian jobs market, despite payroll jobs decreasing by 0.7 of a percentage point in the last fortnight, following a drop of 1.8 per ce...Read more
Economy
New and improved takeover bid sees Sydney Airport open books
The Sydney Aviation Alliance consortium, led by the IFM Investors, has been granted access to Sydney Airport books after submitting a revised acquisition proposal. ...Read more
Economy
ACCC cites LCR as it gives payment processing merger the go-ahead
The local competition watchdog has given its approval of a merger between three major players in Australia’s payment processing sector. ...Read more
Economy
Unemployment at 9.5% in August as lockdowns squeeze labour
August was the first time since the first half of 2020 that Australia’s workforce contracted for two months in a row. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
