No magic wage rise: Cutting super rate left workers worse off

Industry Super Australia

No magic wage rise: Freezing the super rate left workers worse off

Workers never received a promised wage increase when the super guarantee was last cut, a comprehensive analysis of federal workplace agreements reveals.

In 2014 the Coalition dumped the scheduled increase to the super rate promising workers they would get the “money in their pockets2” through wage increases – and those claims are being repeated about next year’s 0.5% increase.

But an Industry Super Australia analysis of 8,370 Enterprise Bargaining Agreements (EBAs) struck before and after the super rate was frozen shows the promised wages boost never materialised and workers were not compensated for their lost super.

The rate was scheduled to rise to 10% on 1 July 2015 and by 0.5% each year thereafter until it reached 12% by 2019. Its delay could cost the average full-time worker, in their 30s, $45,000 at retirement.

Thousands of agreements were locked in place when the SG freeze was announced in 2014, and most employers saw little need to renegotiate them to pass on the lost super as higher wages. The pay cut persisted for years, once those agreements expired the new deals did not include catch up wage increases to compensate for the lost super.

In agreements certified after the super rate was cut, wage growth fell from 3.33% before the cut to 3.27%. This shows employers pocketed the lost super and workers’ total remuneration also went backwards. This paper confirms what Australians already knew, that most employers do not voluntarily return the loss of mandatory super payments as wages and the 2014 super freeze left workers worse off.

Yet despite evidence that freezing the SG at short notices leaves workers worse off politicians are once again claiming cutting next year’s legislated 0.5% super rate rise – only its second increase in 18 years –will lead to higher wages.

The economic downturn makes wage rises far less likely now and most economists now concede that Australian workers are not going to receive any real wage growth over the coming years – making the super rate increase the only pay rise on offer for most workers.

A worker on the cusp of retirement has already lost about $100,000 from previous super guarantee delays, further pauses will compound the losses. It is unfair that some politicians – who receive more than 15% super contributions – are once again cruelly asking workers to sacrifice their chance for security and dignity in retirement for nothing in return.

/Public Release. This material comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length.