Super for gig workers would deliver big retirement gains

Gig workers are likely to see their retirement benefits jump by an average of $29,000 when the Albanese government gives the Fair Work Commission (FWC) the power to set their standards and conditions.

New legislation expanding the FWC’s remit to gig workers was a commitment Labor took to last May’s election.

Although it will be up to the FWC as to what they include in their package, a spokesman for Industrial Relations Minister Tony Burke told The New Daily “we would expect that super would be part of the conversation”.

‘Closing loopholes’

Currently, Mr Burke is examining the extension of rights to gig workers and has met unions, employers and gig platforms in recent weeks.

New legislation is not expected before September, but a range of super tax changes are expected in the May budget.

Although details of the ALP’s plans have not been released, Mr Burke said in February “this year’s legislation and the election commitments we have to get to is about closing loopholes that can undercut the principles [for employment security]”.

Research from Industry Super Australia (ISA) found that extending super to gig workers currently not covered by it would boost their retirement balances by an average of $29,000.

More detailed work from ISA shows that gig workers are predominately young and they would benefit significantly over their working lives by extra super earned doing a few years of gig work before moving to something more secure.

This mainly young cohort of gig workers are often students or people who are otherwise unemployed. Many live with a disability and  receiving small super contributions from gig work would make a meaningful difference at their retirement, ISA says.

By far the largest cohort of gig workers operate in the transport and delivery sectors and the human service sector, which includes carers of various kinds.

Along with odd job and maintenance workers, these make up 47 per cent of the gig workforce.

Transport and delivery workers and carers would be significant beneficiaries of the extension of super to gig workers.

Workers in these sectors on average hours and pay rates would receive between $1100 and $1900 extra annually if they were to receive super.

As the table below shows, these workers would gain between $10,800  and $28,700 if they were to work for between three and five years in a gig job.

Those figures are built on assumptions about the predominately young age of gig workers and the number of years they will have to allow their super balances to compound.

Although superannuation would benefit gig workers the advantage they receive may be lower than the ISA estimates, said Lateral Economics economist Nicholas Gruen.

If employers are forced to pay super, some of that might come out of gig workers salaries, Mr Gruen said.

“In relation to the workers, the employer is not a price taker,” he said.

That means the employer would have the power to use some of the employee’s potential pay rises to pay their super obligations.

“Being a gig worker should not mean you miss out on the opportunity to save for a decent nest-egg at retirement,” ISA CEO Bernie Dean said.

Economic sense

“Paying gig workers super isn’t just the right thing to do, it makes economic sense because they’ll be more self-sufficient in retirement and less reliant on the age pension, which we all pay for through taxes,” Mr Dean said.

“These workers are critical to caring for our elderly, delivering food and driving us home. They have every right to share in the benefits of what is meant to be a universal saving system.”

The most recent survey into the gig workforce, done in 2019 for the Victorian government, found that sector was growing strongly and involved a significant percentage of the community.

It estimated that within a 12-month period about 7 per cent of Australians were in on-demand or gig work, and 13.1 per cent had undertaken digital platform work before.

That 13.1 per cent is similar to recent survey findings in Europe, and higher than some previous estimates for Australia, the report found.

The New Daily is owned by Industry Super Holdings

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