The rise of the ‘gig’ economy may threaten superannuation and retirement incomes.
Association of Superannuation Funds of Australia (ASFA) CEO Dr Martin Fahy said the gig economy has the potential to have profound effects on the nature of work, and will also challenge the effectiveness of the superannuation system.
ASFA estimates that the are currently 100,000 workers in Australia using web-based platforms to obtain work on a regular basis, or around 0.8% of the Australian workforce, with this number expected to grow.
The gig economy can provide more flexible work, but it also comes with risk for retirement incomes.
“Workers who already operate under some form of independent work arrangement – such as independent contractors – will migrate onto web-based platforms and new gig economy jobs will be created,” said Dr Fahy.
“However, the current superannuation settings are not suited to these trends.”
As the Superannuation Guarantee (SG) doesn’t cover independent contractors an increase in independent work means a lower proportion of workers will receive SG contributions.
ASFA is calling for SG contributions requirements to be extended to independent contractors and other self-employed workers. The super industry body also reiterates a call for the $450 a month minimum wage threshold for SG contributions to be removed.
“The case for changes is strong,” said Dr Fahy.
“For affected workers and in the absence of any policy reforms, a growing gig economy would mean lower superannuation balances at retirement. This would reduce the broader adequacy of the superannuation and retirement income system.”
ASFA says the gig economy strengthens its, long advocated, case for extending Super Guarantee to the self-employed.
The organisation has also long called for the $450 SG threshold to be abolished.
“This is particularly relevant for people for who work sporadically and are on low incomes, but also for those who work in the gig economy as a second job,” Dr Fahy said.