Superannuation - For All !

We are fast reaching the stage when an ever growing number of young people will leave school and never settle into a permanent job in which they will start to accumulate a superannuation nest egg to fund their retirement.   The permanent work force is shrinking and is being replaced by semi permanent casual employment which avoids the costs should a recession make it imperative to reduce the workforce.

The job market is transforming into what is called the " Gig " economy.  Smart people who can not find an employer willing to offer them a job gravitate to becoming " contractors " providing some sort of service within the economy.  Unfortunately, the need for that service is sporadic and consequently their earnings fall far short of what constitutes a " living wage ".

The employment laws stipulate a threshold beyond which a casual automatically must become part of that employers permanent workforce, and that is set at $450 per week.   The rate per hour paid to a casual is more than that paid to a permanent employee to compensate for the lack of a superannuation component but the hours worked blur the distinction and that threshold is supposed to remove the " permanent casual " definition that applies to many jobs.

As a consequence, we now see many people working two or three casual jobs and that combination delivers fewer hours and a lower earning level  than what economists believe is a " living wage ".  Their lack of permanency and low income level causes rejection should they apply for a home mortgage.

This is a situation  that is ringing alarm bells in Treasury.  We are facing an ageing Australian population and this is causing an imbalance in the rate of workers compared to retirees.  It must eventually put the aged pension at risk unless those casuals can be included in the superannuation scheme and start building a nest egg for their own retirement.

A popular solution is the removal of that $450 threshold and the imposition of superannuation payments to apply to all forms of reimbursement.  Every citizens would need a superannuation account number and employers would be legally obliged to pay the required superannuation dividend into that account whenever they employed a casual, nomatter what length of time.

It would obviously be a pay office nightmare and costly for employers and it would probably be ignored by both the " black " economy and the drug trade which operates of a " cash in hand " basis.  It would be best handled as  a nationwide operation where any non permanent employee would be part of a common investment fund directly linked to their input of earnings. They would in fact become shareholders, and their number of shares would correspond with the amount cumulatively deposited by a number of employers.

This Gig economy is a fast expanding phenomenon.  The percentage of the workforce designated " casual " continues to grow and unless a way is found to include them in the superannuation retirement  distribution they will grow to form a class of citizen seriously disadvantaged in old age.

How you earn your money should not undercut the progression towards economic independence in old age.  The only issue is implementing a scheme that both employee and employer regard as reasonable - and making it work !