Employers could face wage/super trade-off

Business owners could be asked to increase superannuation payments to employees instead of direct wage rises under a plan being considered by unions today.

Many employers with unionised workforces will be conducting a new round of enterprise agreement negotiations over the next 12 months, and unions are currently in discussion about the strategies they will adopt.

A key problem unions are wrestling with is how to pursue improvements for their members without fuelling inflation in a way that triggers further interest rate rises.

One solution being considered is a push to have compulsory employer superannuation contributions increased from their current 9% to 12% by 2012.

But Australian Business Lawyers managing partner Tim Capelin says today’s decentralised nature of wage negotiations could make it difficult to persuade employees that they should defer pay rises through superannuation.

“It can’t be imposed on employees on the ground,” Capelin says. “When you’ve got employees who just had another mortgage rate increase, the idea of having more super may sound good but it won’t pay your mortgage today, so it could be hard to persuade people.

“It can’t be imposed on employees on the ground and it could be hard to persuade people to go to super even with some of the tax advantages involved,” Capelin says.

But, he says, employers wouldn’t necessarily be opposed to the idea of increasing super contributions instead of wages, provided that there was a genuine trade-off between the two.

“Inflation is certainly something that enters into business calculations, but in the end it will come down to basic business principles, so if the Government has policy reasons to keep wages low they may need to offer some encouragement to make that happen,” Capelin says.

ACTU secretary Jeff Lawrence told The Australian Financial Review that while wage rises were needed to relieve cost of living pressures employees are currently facing, increasing superannuation could be “particularly important in the current economic circumstances”.

Unions are also ramping up pressure on the Federal Government to improve worker protections in new industrial relations laws currently being considered by Federal Parliament.

In its submission to the Senate inquiry into Labor’s transitional IR laws, the ACTU calls for existing AWAs to be unilaterally terminated if they disadvantage the employee concerned.

And on the employer side, the Chamber of Commerce and Industry of Western Australia says the laws should be amended to allow casuals to work under Labor’s new individual transitional employment agreements.

In WA many casual workers, especially in the construction and retail sectors, were employed under AWAs, but CCIWA says the new legislation prevents them moving on to ITEAs.

For more on IR: See Peter Vitale’s story on how the courts are enforcing unfair dismissal laws – having the right company policies in place makes all the difference.