Watch a summary version of his talk below.
The full paper is posted at: The Relationship Between Superannuation Contributions and Wages in Australia.
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The Centre’s 11th annual ‘Go Home on Time Day’ report also reveals the growing polarisation of working hours, between Australians who have too much work and others who can’t get enough. While 21 percent of Australians in full-time employment are working more than they want to, 48 percent of part-time workers and 64 percent of casual workers want to work more hours.
“There is an epidemic of time theft in Australia right now and it is costing workers tens of billions of dollars, each and every year,” said Bill Browne, researcher at The Australia Institute and author of the report.
Each November, the Centre urges Australians to appreciate the value of their legitimate time off by leaving their jobs at the end of their paid workday.
“Today is the day we ask all Australian workers to go home on time. We need to put limits on our work – and push back against the increasingly common expectation among employers that we should stay late for free.
“Our research has shown that employees are regularly staying late, coming in early, working through their lunch or other breaks, taking work home on evenings and weekends or being contacted to perform work out of hours.
“Most Australians wouldn’t dream of working for 6 weeks without pay, but that is happening every single year in the average Australian job.
The Centre’s 2019 ‘Go Home on Time Day’ survey indicated that even part-time and casual workers, most of whom want more paid hours of work each week, are still being asked to work unpaid overtime.
“At the same time as many Australian workers report they would prefer more hours of paid work, unpaid overtime is an all too frequent occurrence,” Browne said.
“In an era of wage stagnation, underemployment, insecure work and significant cost of living pressures, Australian workers cannot afford to give their time away to employers for free.
“To end the epidemic of time theft, regulators must enforce existing rules regarding maximum hours of work on a more consistent basis, and provide workers with more choice to refuse overtime and work shorter hours. Workers, either individually or through their unions, must also demand that employers respect their right to leisure time – for their own benefit, and for the good of Australian society.”
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New research from The Australia Institute’s Centre for Future Work estimates that Australian workers are currently working an average of 4.6 hours of unpaid overtime each week, which translates to 6 weeks of full time work without pay, per employee, per year – with an annual worth of $81.5 billion for Australian employers.
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The research refutes claims made by some commentators and lobbyists that higher superannuation contributions would automatically lead to lower wages, and hence would be self-defeating. The new research finds no statistical evidence for that claim in Australian empirical data.
The paper reviews economic statistics from the introduction of superannuation to the present. On average, wages were more likely to accelerate and grow at a faster rate when the superannuation guarantee (SG) rate was increased, than to decelerate or grow more slowly. This indicates a slight positive correlation between wages growth and changes in employers’ minimum SG rate.
The paper also reviews theoretical predictions and empirical findings from previously published economic research. Even under very restrictive and unrealistic assumptions about competitive market-clearing behaviour in labour markets, the expectation of a fully offsetting one-for-one trade off between wages and SG contributions only occurs in the special cases of perfectly inelastic labour supply, or perfect substitutability between voluntary and policy-induced personal savings. Neither of those conditions prevail in practice. More realistic economic models (that allow for responsiveness in labour supply, minimum wages, and other real-world features) do not anticipate a full trade-off – and many expect no trade-off at all.
The paper concludes that current record-low wage growth in Australia cannot be “fixed” by abandoning scheduled increases in the SG rate (which is currently legislated to grow from 9.5% of wages to 12% over a five-year period, beginning 1 July 2021). Abandoning those increases would only further suppress the total compensation received by workers, which has been falling steadily as a share of GDP for decades. Instead, weak wage growth should be tackled with direct wage-boosting policies; the determination of wages and superannuation contributions are largely independent policy decisions.
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New research from the Centre for Future Work shows that there is no statistical evidence for the long-held assumption that if unemployment falls below its so-called “natural” or non-accelerating inflation rate (the NAIRU)—currently thought to be around 5% unemployment—that inflation and wages will grow uncontrollably. The report concludes that Australia’s controversial NAIRU concept and it’s use in economic policy should be abandoned.
Key Findings:
“In Australia, we blame the unemployed for their supposed lack of skills and motivation but at the same time, use macroeconomic policy to stop unemployment getting ‘too low’ – it’s an enormous contradiction,” says David Richardson, senior research fellow at The Australia Institute.
“Record-low wages growth, and Australia’s generally sluggish economic performance, make the need for a change in policy direction all the more urgent.
“It is time for a fundamental rethink of Australian macroeconomic policy, which should instead be focused on restoring genuine full employment as the top priority.
“Since chronic unemployment is the outcome of deliberate policy, the least society can do is fairly compensate those who have been hurt by this policy – raising Newstart would be a start.”
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The National Youth Commission into Youth Employment and Transitions has been holding an inquiry in communities across Australia to document the situation of young workers, who are experiencing much lower rates of employment and income than other workers.
Stanford’s submission argued that young workers are like the “shock troops” of the precarious labour market: the ones sent in first to confront an especially dangerous situation. The rise of precarious work in all its forms – part-time work, casual jobs, labour hire, temporary positions, marginal self-employment, and digitally mediated ‘gigs’ – now dominates youth employment patterns. And that situation will not automatically disappear as young workers get older and gain experience. Rather, evidence suggests that without policy measures to stabilise and improve jobs, this will be a permanent shift that gradually affects most workers. Already, less than half of employed Australians are working in a ‘traditional’ full-time permanent wages jobs with normal entitlements (like paid holidays, sick leave, and superannuation). For young workers, that ratio is less than one in five.
Stanford argued for targeted measures to stimulate more youth hiring into stable positions, an ambitious effort to rebuild vocational education in Australia and strengthen pipelines to post-education jobs, and a broader commitment to full-employment macroeconomic policy.
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In this new report, researchers document the experience of front-line disability service workers under the NDIS based on first-hand qualitative interviews.
The report was a joint initiative of two leading academic researchers (Prof. Donna Baines, formerly of the University of Sydney, and Dr. Fiona Macdonald of RMIT) and the Centre for Future Work. Researchers conducted detailed face-to-face interviews with 19 front-line disability service workers, mostly in the Newcastle, NSW region. (Newcastle was one of the locations chosen for NDIS trials, so workers in the region have more experience with the reality of NDIS delivery problems.)
The interviews indicated 8 major problems negatively affecting the stability, quality and sustainability of work for disability support workers:
The deterioration in job stability and working conditions under the NDIS will inevitably impact on the quality of service experienced by NDIS clients; it will also exacerbate the overarching challenge of recruitment and retention facing disability service providers as they try to attract the 80,000 new full-time equivalent workers required to operate the scaled-up NDIS.
The researchers conclude with several policy recommendations to improve the quality and stability of work for disability support workers, and the quality of care for participants.
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New research shows active strategies to directly link university degrees to a job are needed, to better support university graduates as they negotiate a rapidly changing labour market.
The report, by the Australia Institute’s Centre for Future Work, shows that employment outcomes for university graduates have deteriorated significantly since the Global Financial Crisis, with only 73% of recent university graduates finding full-time employment within 4 months of graduating – down from 85% in 2008.
Key Findings:
Alison Pennington, Senior Economist, Centre for Future Work:
“Employment outcomes for university graduates have deteriorated significantly since the GFC,” says Alison Pennington, Senior Economist at the Centre for Future Work and co-author of the report.
“Finishing tertiary education and finding a job in your field is a difficult and haphazard experience, which is leaving many graduates in jobs that do not fully, or even partially, use their hard-won and expensively acquired skills.
“Vocational degrees, which are tied to specific occupations like health care, engineering or teaching, have the best employment placement rates. As seen in these professions, directly linking degrees to jobs through paid placements, occupational licensing and accreditation would greatly improve the situation of graduates.
“A hands-on and direct approach that channels graduates directly into relevant career opportunities is needed. Australia could learn a lot from other countries, especially in Europe, where this is already being achieved through forecasting future skill requirements and planning higher education offerings accordingly.”
Noel Edge, Executive Director of Graduate Careers Australia:
“The overwhelming message from this report by the Centre for Future Work is the need for further research in graduate employment,” says Noel Edge, Executive Director of Graduate Careers Australia.
“Research to explore the emerging work environment for tertiary education students in Australia, beyond basic government labour-market forecasting and graduate outcomes reporting, simply does not exist.”
The report was commissioned by Graduate Careers Australia.
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The world of work is being transformed by a complex and interdependent set of forces – including technology, changes in workplace organisation and employment relationships, environmental and demographic challenges, and more. No group of workers will confront the reality of constant change more directly than young workers. As new entrants to the labour market, they cannot count on the protection of previous structures or practices to insulate them from coming changes. They immediately face the challenges of an increasingly precarious job market – one in which less than half of all employed Australians now fill a traditional “standard” job (full-time, permanent, paid work offering normal entitlements like paid leave and superannuation).
Holding a university degree is still a vital and valuable asset for young workers entering this challenging and unstable milieu for the first time. Individuals with university degrees are more likely to be employed, to have more stable jobs, and to be paid more. But despite this relative advantage enjoyed by university graduates, employment conditions have become much more challenging even for graduates. Rates of graduate employment in full-time work are down significantly over the past decade, and there is evidence of a growing mismatch and underutilisation of university graduates in positions that do not fully or even partly utilise their hard-won knowledge and skills. At the same time, employer complaints about supposed skills shortages and the dearth of “job-ready” graduates are as loud as ever; the report documents that those complaints need to be interpreted with considerable scepticism.
Australia’s higher education system could do a much better job at anticipating the needs for highly-skilled workers in the future, evolving their program offerings in light of those needs, and then assisting students as they traverse their university educations and find meaningful, relevant work.
This comprehensive new report from the Centre for Future Work, developed in conjunction with Graduate Careers Australia (an association that has worked to gather data and make recommendations regarding university graduate employment issues) provides an overview of the prospects and challenges faced by future university graduates. The report confirms that university education makes a vital, essential, and valuable contribution to Australians’ prosperity: both at an individual level for those who have attained higher education, and at the macroeconomic and social level. But it catalogues gaps and failures in crucial education-to-jobs transitions, considers the most likely factors contributing to those gaps and failures (while dispensing with some commonly-cited but unconvincing myths and stereotypes), and makes several concrete recommendations for policy change and innovation.
Key findings of the report include:
Download the full report, The Future of Work for Australian Graduates: The Changing Landscape of University-Employment Transitions in Australia, by Alison Pennington and Dr. Jim Stanford. There is also a 12-page summary report available for download. The report was commissioned by Graduate Careers Australia.
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The commentary was prepared for the My Labour, Our Future conference held last month in Montreal, Canada to mark the 100th Anniversary of the founding of the International Labour Organization. We thank the organizers and the Atkinson Foundation for permission to repost the paper.
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