Super increase a hard pill for Gen Y to swallow
Superannuation – it’s changing. Following the passing of the controversial mining tax, the government’s plans to use part of the tax to fund an increase to the super guarantee from nine to 12 per cent by 2019/20 are gaining momentum.
The Australian Chamber of Commerce and Industry has slammed the super increase, saying the super increase will cost business $20 billion a year when the increase is fully implemented to 12 per cent.
However Workplace Relations Minister Bill Shorten has insisted the superannuation increase is not a tax on business. He also contends that workers won’t have to pay for increased super contributions through a reduction in pay.
Instead, Mr Shorten insists the super increase will be covered by ‘deferred wage increases’ worked out between employers and employees during wage negotiations.
“An increase in super means an increase in remuneration or wages by any other name,” Mr Shorten said last week.
But do employees feel the same way?
A recent Employment Office survey has revealed that 95% of workers believe that job salaries should not be advertised as a figure inclusive of super. Instead, they believed the fairer way to advertise a salary package was with a base salary figure, plus super.
Furthermore, 31% of respondents did not see superannuation as a legitimate component of their salary package, but rather as a obligatory payment that is the responsibility of their employer.
So with this attitude, will employees be happy to accept super increases as a part of their future wage negotiations?
Employment Office Managing Director Tudor Marsden-Huggins says it’s a problem that employers will frequently run into, as Generation Y further infiltrates the workforce.
“There’s an all too common sentiment amongst Gen Y workers that super isn’t really a part of the salary they earn. Instead, they see it as an additional extra that the employer is obliged to contribute on their behalf.
“Although many older workers see superannuation as a valuable investment for their future retirement, there’s a mentality among young workers that retirement is just so far away, and super doesn’t seem that important.
“It’s going to be an uphill battle for employers to convince young workers that their future wage increases will have a superannuation component, when their priority is very much on the cash they receive in their fortnightly pay packet,” he said.
Mr Marsden-Huggins points out that the attitudes towards superannuation vary across different industries.
“We find that when we are recruiting for positions in the finance or accounting fields, candidates see their salary as inclusive of super, rather than focussing on a cash component, plus super. People working in these industries seem to understand that super is a significant employee cost to an employer, and look at the salary package more holistically.
“In other industries there is a tendency to focus on the cash salary and treat superannuation as merely an afterthought. Perhaps it’s that candidates don’t appreciate the huge budgetary commitment that super contributions are for employers,” he said.
The proposed super increase will be phased in through yearly instalments of between 0.25 per cent and 0.5 per cent over seven years.
Mr Marsden-Huggins suggests employees make an effort to meet their employers halfway on the superannuation front.
“With this super increase on the table, many employees will need to rethink their perspective of super as a separate component from the rest of their salary. Yes, superannuation contributions are compulsory, but they are a compulsory part of an overall salary package, and should be viewed as such. It is necessary to look at the whole picture and realise that super, especially at 12 per cent, is a significant part of the salary package,” he said.
For more information, or to arrange an interview, please contact:
Brooke Chapman, Publicist, Employment Office – 0407 163 876
