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Report unveils costly super law for young workers

Industry Super Australia (ISA) has recently released a report shedding light on a legal provision that denies under-18-year-old workers the opportunity to receive super contributions. 

This provision, which requires young workers to meet a 30-hour per week threshold with the same employer, has been criticized for its discriminatory nature and its potential financial impact on these individuals. According to the ISA’s research, approximately 375,000 of Australia’s youngest workers are currently excluded from the country’s retirement system due to this provision, resulting in a loss of around $330 million in super contributions each year. On average, these young workers would receive an additional $885 per year in super contributions if not for this restriction. Over time, this amount could accumulate to an estimated $10,200 by the time they reach retirement age.

The ISA’s Super Start to Work Report argues for the removal of the 30-hour threshold, highlighting the financial disadvantages and administrative burdens it creates for both young workers and employers. Keeping track of hours worked by under-18 employees, particularly given the prevalence of casual employment among this group, can be challenging for businesses. The quarterly payment of super also adds complexity to the process.

The report reveals that the majority of under-18 workers regularly miss out on super contributions, as more than 90% of teenagers typically work less than 30 hours per week. However, it is important to note that paid work remains a consistent part of many underage workers’ lives, with 75% of them employed for 6-12 months annually.

The current provision dates back to the introduction of the superannuation system in 1992. The ISA suggests that updating and removing this outdated requirement would help ensure fair treatment and financial security for Australia’s young workforce. The ISA’s report also highlights the potential long-term consequences of denying young workers access to super contributions. Without these contributions, young individuals may face financial challenges in their later years, particularly when it comes to retirement. The inability to accumulate adequate savings during their early working years can have a significant impact on their future financial stability.

Furthermore, the report emphasizes the importance of providing equal opportunities for all workers, regardless of age. By removing the 30-hour threshold, younger employees would have the same opportunities to save for their retirement as their older counterparts. This would not only promote fairness and equality but also encourage financial literacy and responsible saving habits from a young age.

Several advocacy groups and experts have echoed ISA’s call for reform. They argue that young workers deserve the same rights and protections as other workers, including access to superannuation benefits. Additionally, they emphasize the need to address the broader issue of income inequality and precarious work, which disproportionately affect young workers.

In response to the report, some policymakers have expressed support for reviewing the existing provisions and exploring potential reforms. However, others raise concerns about the potential costs and administrative complexities associated with such changes. Nonetheless, the debate surrounding this issue underscores the need for a comprehensive examination of the current system to ensure fair treatment for all workers.

Industry Super Australia Chief Executive Bernie Dean said: “This is an out-of-date law that discriminates against our youngest workers just as they’re starting out – it’s unfair and the law needs to be modernised. Locking thousands of teen workers out of our world class retirement savings system is not giving them the super start to work they deserve. How can we explain that young workers don’t get super while an older colleague doing the same job does.”

“Removing the 30-hour threshold wouldn’t just be fair for young workers, it would be good for the employers who have to face the administrative nightmare of keeping track of the weekly hours of a highly casual workforce.”

Moving forward, it remains to be seen whether legislative changes will be made to address the concerns raised in the ISA’s report. However, the growing advocacy for equal treatment and financial security for young workers suggests that there is a strong case for reform. As discussions unfold, it is crucial to consider the long-term implications of denying young workers access to super contributions and strive towards a more equitable and inclusive retirement system for all Australians.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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