Employment trends put a super future under threat
Changing employment trends will upset most predictions of superannuation growth, unless full employment is achieved in the next 20 years, says The Evatt Foundation executive director John Freeland.
Freeland told delegates at the CMSF conference that labour market trends meant a growing proportion of the workforce would not be able to provide for its own superannuation.
"If guaranteed employer contributions are not increased to 12 per cent, some 60 to 70 per cent of the adult population will not be in a position to cater adequately for their own retirement requirements," he said.
"They will be either be dependent on social benefit payments to supplement their super-based income or they will be entirely dependent on social benefit payments."
Freeland says the government has not recognised the problem, let alone its severity and, as a result, the superannuation industry is facing a major crisis as to who will provide the solutions to the problems.
Almost 55 per cent of the population were actively in the labour force in 1996, including both employed and unemployed.
The move to full-time employment will be affected by changes in work patterns of both male and female full-time workers and by the growth of part-time work.
Freeland notes that only 46 per cent of 15 to 19 year-old males worked full-time in 1996 compared to 62 per cent in 1966. In 1966, 91 per cent of male 20 to 24 year-olds were in full-time work, but this had fallen to 76 per cent by 1996.
At the older end of the employment scale, the decreasing participation in the workforce was just as dramatic. However, part-time workers counter-balance the fall in full-time employment for males. The ratio of females in full-time work shows similar patterns. In the 15 to 19 age group, 58 per cent of females in 1966 were in full-time work. This has plummeted to 12 per cent today. However, in the 20-24 age group, employment ratios over the 30 years are identical, at 48 per cent.
The growth of part-time work by females is stronger in the nineties than the sixties.
In 1996, 34 per cent of females between 15-19 are in part-time work and this rises to 31 per cent by the age of 35-44. It then declines again to 10 per cent by the age of 65.
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
