Research paper supports lifting SG

21 November 2019
| By Mike |
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Those opposing increasing the superannuation guarantee (SG) are simply wrong in asserting that it will lead to greater wage growth, according to a research paper produced by the Centre for Future of Work at the Australia Institute.

The paper, which is being promoted by the Australian Institute of Superannuation Trustees (AIST) said that, infact, there is evidence to suggest that higher SG payments are associated with faster growing wages.

“In no case does the empirical evidence support the existence of a visible or statistically significant trade-off between wages and superannuation contributions (or compulsory employer-paid social contributions more generally) – let alone the perfect one-to-one trade-off assumed by those opposing scheduled increases in SG rates,” the research paper said.

In fact, the Australian historical analysis finds a surprising positive correlation: higher SG payments are associated with faster growing wages, not slower, and in some specifications that finding is statistically significant,” it said.

“The assumption of a one-to-one trade-off between superannuation contributions and wage growth is not credible, and policy conclusions based on that assumption should be rejected.”

The paper said that record low wage growth would not be fixed by giving up planned increases in compulsory superannuation contributions by employers.

“Australians concerned with weak wage growth should support measures that directly tackle that problem,” it said.

“Cancelling planned increases in the SG rate will not shift income from employers to workers; it would almost certainly lead to even further reductions in overall labour compensation relative to GDP,” the paper said.

“In that context, the planned increases in superannuation contributions should be supplemented by active measures to strengthen wage growth. Then Australian workers could attain both improved living standards now, and a decent and secure income after they retire.”

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