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ASFA calls for gig economy super solutions

Media Release 2 February 2018

2 February 2018

ASFA calls for gig economy super solutions

The gig economy is in growth mode with the number of gig workers on platforms in Australia up by 50 per cent, from 100,000 to around 150,000 over the last year.

As web employment platforms expand to encompass more professions and industries, and more Australians engage with them, ASFA is calling for legislative reform to ensure shifts in the economy don’t unduly impact retirement planning for many individuals.

ASFA CEO Dr Martin Fahy said there was no time to waste in fixing gig economy super settings.

“Gig economy platforms continue to show exponential growth so we need to ensure those involved are not losing out on super,” he said.

“The gig economy can and should be part of the solution for funding retirement rather than a problem.

“The gig economy, where buyers and sellers of goods and services are matched or organised via web based platforms, can offer positive benefits and facilitate portfolio careers especially for people transitioning into retirement.”

To help shore up retirements for people working in the gig economy, ASFA’s Pre-Budget Submission focuses on: the need for a new ‘dependent contractor’ category within the legislative framework for the Superannuation Guarantee (SG); tougher sham contracting penalties, SG for the self-employed; and, elimination of the $450 threshold for entitlement to the SG.

“ASFA recommends amending the law to create a new ‘dependent contractor’ category that sits between employee and independent contractor categories and will enhance protections and obligations,” Dr Fahy said.

“This would provide super to people in the gig economy who essentially work like employees but without the associated benefits. Around the world there is increasing attention on getting policy settings right for gig economy workers.

ASFA is calling for sham contracting protections in the Fair Work Act to be strengthened.

“We estimate around 50,000 Australians are affected at any one time by sham contracting,” Dr Fahy said.

“It’s a shame, but the reality is some employers will go out of their way to artificially create contractual arrangements to avoid paying entitlements.

“The future retirements of many Australians, particularly women, are at stake,” Dr Fahy said.

“An estimated eight per cent of people in this country hold more than one job. Half of these people are combining jobs to reach the equivalent of full time employment.

“Fifty-five per cent of multiple job holders are women, compared to forty-five per cent of all single job holders.”

Dr Fahy said independent contractors are not usually covered by the Superannuation Guarantee (SG) and as more and more people move into independent contracting arrangements, including through web platforms, many on lower incomes could suffer.

“With the rise of the gig economy, how people work is likely to become more varied,” he said. “There also are issues relating to the self-employed more generally.

“Almost one quarter of self-employed people have no super, with women most affected.

“Many of the self-employed do not own a business with any material goodwill, other than their labour and this is particularly relevant for gig economy workers. In general, the self-employed have lower super balances than employees across all ages.”

ASFA research, based on Household, Income and Labour Dynamics in Australia (HILDA) data, shows highly paid temporary agency workers often receive the same entitlements, such as leave provisions, as permanent workers but low paid casual workers can be doubly disadvantaged.

“These people don’t get paid leave, are more likely to experience fluctuating earnings and involuntary job loss and already earn relatively low wages. Missing out on super just compounds their disadvantage.”

Finally, the $450 per month earnings threshold for payment of the SG penalises low income earners, permanent part-time workers and people with multiple jobs.

ASFA estimates about 365,000 individuals, 220,000 women and 145,000 men, are having their retirements compromised by the threshold.

The more people do gig work, the more likely they are to lose out because of this threshold, so it is becoming even more of a pressing issue.

Furthermore, advancements in payment system technology and automation of payments have rendered the threshold redundant. The administrative cost burden historically cited by employers in rejecting calls for change doesn’t stack up anymore.

Dr Fahy said ASFA recommendations were achievable and fair and he called on the government to support them

“In the future there is likely to be more work but fewer permanent, full-time jobs, so these challenges must be met to bring everyone forward in the economy,” he said.

For further information, please contact:

Teresa Mullan, Media Manager, 0451 949 300.

About ASFA

ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation, which aims to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.

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