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Busting myths about wage growth and the Superannuation Guarantee

Oct 1, 2019News

Misinformation surrounding the Superannuation Guarantee has led to a heated debate over whether to scrap the rise in minimum employer contributions. The McKell Institute has used several indicators of wage growth to reassess the impact of super growth on wages empirically – and bust the myths surrounding the guarantee.

Right-leaning think tank The Grattan Institute has calculated a $20 billion loss in wages between 2021 and 2025 – resting on the assumption that raising the Superannuation Guarantee by 0.5 per cent will remove the same amount from wages.

This assumption contradicts the Fair Work Commission’s 2012-13 Annual Wage Review on which it relies. While the review acknowledged that minimum wage growth was somewhat slowed by super increases, it explicitly stated it was inappropriate to quantify this effect.

There are many ways businesses can adapt to higher super payments without removing the proportion from wages, including raising prices for consumers, absorbing a portion in lower profits and increasing productivity.

The claim that super increases will be directly deducted from wages is based on speculation with limited evidence to support it.

Click here to read the McKell Institute’s research results.

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