Australia’s gig workers are missing out on $400 million a year in super contributions, a new Industry Super Australia report has found.
Delivery drivers, disability carers, IT professionals, education workers and other services all make up the 275,000 workers Industry Super Australia (ISA) estimates are in the gig economy.
ISA analysis for the extending the super guarantee to gig workers report shows, the average gig worker could have up to $29,000 more in their retirement nest egg if super was paid to the on-demand workforce.
This mostly young workforce are often students, otherwise unemployed and many live with a disability, getting small super contributions from gig work would make a meaningful difference at their retirement.
ISA analysis shows the typical transport and food delivery driver gig worker misses out on $1,900 super contributions a year when working an average of 14.5 hours a week, earning $24 per hour.
Spending three years in the industry would mean these super contributions would reach $17,200 at retirement and $28,700 if in gig work for five years.
A caring gig worker – a growing part of the on-demand workforce – who earns the average $23.40 an hour and averages 8.6 hours a week would get $1,100 extra a year in super contributions.
After three years in the industry these super contributions could mean an extra $10,800 at retirement or $17,500 after five years of work.
Not only would this extra money improve the quality of life for individuals at retirement it would reduce the burden on the age pension.
Paying super to gig workers is becoming more important as the on-demand workforce grows. A 2019 academic survey with 14,000 responses estimates that within a 12-month period about seven per cent of Australians were in on-demand work and 13 per cent had undertaken digital platform work before.1
More than half of Australia’s gig workers are under-35 and not earning super deprives them of decades of compounding earnings. Many also live with a disability, are students or otherwise unemployed. Small super contributions from gig work could make a big difference in these workers’ quality of life at retirement.
The Federal Government has flagged it will legislate to extend the Fair Work Commission powers to set a minimum set of employment standards for many gig workers, which would include the payment of super.
Industry Super Australia supports moves that upholds the flexibility and convenience of gig work but also ensures a minimum set of employment standards.
Comments attributable to Industry Super Australia Chief Executive Bernie Dean:
“Being a gig worker should not mean you miss out on the opportunity to save for a decent nest-egg at retirement.”
“Paying gig workers super isn’t just the right thing to do, it makes economic sense because they’ll be more self-sufficient in retirement and less reliant on the age pension, which we all pay for through taxes.”
“These workers are critical to caring for our elderly, delivering food and driving us home, they have every right to share in the benefits of what is meant to be a universal saving system.”