They can’t be serious, can they?
I mean, just because they can… some of them think they should?
The ‘they’ in this case are some businesses — reportedly maybe even a majority — who think the right response to the increase in the Superannuation Guarantee is to lower their employees’ take-home pay to fund it.
Now, I will put the obligatory (and true) declaration up front:
As I’ve said before, I’m a signed up member of the ‘well-regulated democratic capitalism fan club’.
I mean, sure, we need to work on a more catchy name, but at least the description is accurate.
Business in general, and the profit motive in particular, have been responsible for much of our economic (and hence societal) progress. It is, generally speaking, a force for good.
It has also brought us pollution, exploitation and excessive consumerism, so it’s not perfect!
But on balance, it’s a net positive, and — to appropriate a line from Winston Churchill — the worst form of economic organisation except for every other one that’s been tried!
And yet, some businesses are doing their level best to disenfranchise both their employees and society at large.
Which, on the face of it, seems counterproductive… but here we are.
If you’ve missed the headlines, here’s the summary:
From July 1, businesses are required to lift their Superannuation Guarantee contributions from 9.5% of pre-tax salary to 10%.
Which is good for the employees, the federal budget, and Australia at large.
Yes, it would also slightly increase the cost of employment. But, on balance, it’s one cost line, increasing by 0.5%.
It might not be welcomed by some businesses, but it should be affordable.
And so, through gritted teeth or otherwise, it’ll be provided as an increase to total remuneration, right?
Not so fast!
Now, the good bosses and companies will do exactly that.
This is a regulatory increase, designed to increase retirement savings.
Turns out, though, that some businesses are going to play funny buggers with the increase.
See, some business have employed staff on a ‘one number’ total remuneration package.
That is, for example, $100,000 per annum, including Super.
Under the current system, that means they’d be receiving a pre-tax salary of $91,324, and Super contributions of $8,676.
Now, with Super increasing to 10%, you’d hope that the new Super contribution would be $9,132 (10% of $91,324), and total remuneration, as a result, would be $100,456.
Apparently, though, some bosses are planning to tell their employees “Sorry, I employed you on a $100,000 package, so if I have to pay more Super, it’s going to come from your take-home pay”.
Instead of getting:
– The current $91,324, plus $8,676 Super; or
– $91,324, plus 10% Super (the intent of the new rules)
Some bosses will tell our hypothetical employee that they’ll still get $100,000, but it’ll now be made up of:
$90,909 in pre-tax pay, plus $9,091 in Super.
Yes, (again), seriously.
Now, I know that’s not the intent of the new rules.
You know that’s not the intent of the new rules.
And yes, those bosses do, too.
Now, I hope the number of companies trying to pull this fast one ends up being much, much lower than what’s being reported / speculated.
And, frankly, if your boss pulls this one on you, you’ll now know exactly how valued (or otherwise) you are.
And yes, I reckon you should absolutely take that into account when deciding where to work.
To be fair, it’s possible some workplaces might accidentally do it, if their payroll systems are set up incorrectly.
So you should probably give the boss the benefit of the doubt, and ask if that’s really what they intended.
But if they did… well, now you know.
And hey, by all means make your own decisions on where you should work, based on all of the factors that make a company, role and workplace attractive and unattractive.
But, as I said, now you know.
Oh, and I’ll take a line straight from Bob Hawke, circa 1983: I reckon any boss who decides to take money out of your take-home pay to fund the Super increase is a bum.
I know business is tough. I know business owners are taking all the risk, and often pay themselves last. But, if the wages bill is, say, half of a company’s costs, this adds 0.25% to their total cost base.
Or put another way, decreases their profit margin by 0.25%.
Unwelcome? Maybe. Unaffordable? Probably not. And if a business is that marginal that a 0.25% increase in costs is the final straw, they were probably only one rent increase or competitor incursion away from collapse anyway.
Again, I know business isn’t easy. I know it can feel like they’re being hit with one cost impost after another. And chasing success can feel like running through treacle. I just don’t think this is an unreasonable change. And, it’s happening — so the choice is to either do the right thing, per the intention of the regulation, or to try to skirt around it.
I reckon business should do the former.
Super is important. For every single person reading and for the health of future federal budgets. I’m the last person to want to take the long handle to honest, decent bosses. But I think it’s important.
Oh, and lest I end this rant on a negative note, I’ve heard from quite a few bosses on Twitter on this topic. Some have confirmed they won’t cut take-home pay. Others are already paying more than they’re obliged to, and intend to keep doing it.
Bravo! May your businesses thrive, as they surely will, because you have motivated workers who know you care about them.