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The Future of WorkExpectations of employers and employees in a changing workforce

November 2016

3

Contents04 Foreword from Damian Hill

05 A note from Mark McCrindle

06 Key findings

07 Executive summary

08 A snapshot of the Australian workforce

12 A snapshot of Australian employers

14 Social media, technology and the workforce

18 Needs of the Australian workforce

26 Impact of contingent work on retirement savings

36 Conclusion

38 Appendix

4 | The Future of Work 2016 5

Ten years ago, it was simply inconceivable to think that an employee could be sitting in their home in their off-time, log in to an app or website and be earning an income within minutes – driving, cleaning or performing odd-jobs for others.

Thanks to the era of technological transformation, a huge wave of human capital has been unleashed to work on odd jobs through apps, websites and social networks.

With the contingent workforce already comprising a third of the workforce1, it’s clear that employers will need to create different incentive and employment structures to meet this demand for more flexible work arrangements.

The major restructuring of the workforce along these lines also begs a number of critical questions for business leaders. How do you incentivise an employee who can turn their spare time into cash? How do you manage a workforce that expects to be able to turn up when they want, where they want?

REST commissioned the development of this whitepaper, The Future of Work, to answer these questions, and many others, in order to help employers who are grappling with understanding the challenges and benefits associated with this changing workforce. Because as much as these new arrangements do pose a threat to so-called ‘traditional’ employers, they also present a huge opportunity to reshape and adapt value propositions to get the most out of these employees.

Imagine a retail store whose employees can fill shifts with an hour’s notice to help with unexpected peak periods of demand, allowing it to tap into a wide labour pool to fill peaks in business. Imagine reducing the number of staff on a shift, with the knowledge that you’ll be able to fill peak demand via an app.

This is all possible today – but in an environment in which contingent work is increasingly common, investment in building an employer value proposition that caters to these individuals will truly capture this opportunity.

REST hopes you find The Future of Work useful to shape discussions about meeting and adapting to the needs of the 21st century workforce.

Damian HillChief Executive Officer REST Industry Super

Foreword from Damian Hill

1 Upworker Report, October 2015

The last decade brought us a Global Financial Crisis (GFC) that resulted in economic transformations at a household, corporate and national level. Less acknowledged is the impact the GFC has had on demographic change, and the new social trends this has spurred – particularly the massive technological transformation.

Ten years ago there was no iPhone. Twitter was only being developed, YouTube was just emerging, and words like ‘app’, ‘Wi-Fi’, ‘memes’ and ‘selfies’ meant nothing. Our changing lexicon from then to now gives an insight into our changing world. Back then, ‘hashtag’ was the rarely used character on the keyboard, ‘the cloud’ was what could be seen in the sky, things ‘going viral’ was an issue for public health and ‘tablets’ were for medical purposes.

A decade ago Australia’s population had just hit 20 million people; today, it is more than 20% larger at 24.3 million. In less than a decade, Australia has added more than the population of Western Australia, Tasmania, the Northern Territory and the ACT combined. But our population is not only larger – we’re older, more urbanised and more culturally diverse than ever before.

The workforce is also changing. Portfolio careers, teleworking, the demand for work-life balance, and increased casualisation play a more prominent role in the modern-day workforce. To remain relevant, it is more important than ever that employers accept collaborative ways of working, are equipped – and equipping their workforce - with the tools and technology to engage a diverse workforce, and develop a compelling employee value proposition to ensure better attraction and retention of workers.

As The Future of Work demonstrates, the budding trends of the last decade have become mainstream today and another wave of change is on the horizon. It’s important that leaders don’t ride the wave, but instead understand the trends, respond to the shifts and shape the future. Only occasionally in history do economic shifts combine with rapid demographic change, huge generational transitions and phenomenal technological transformations. We are living in that era, let’s embrace it.

A note from Mark McCrindle

Mark McCrindleDemographer and Trend AnalystMcCrindle Research


Executive summaryThe shape of Australia’s job market changed forever in 2008, with the shockwaves of the global financial crisis causing a tightening of hiring budgets and downsizing of headcount across a number of industries.

Over the past six months there has been an increase of 82,600 people working part-time, compared with a 21,600 decrease in those working full-time (according to the latest Labour Force release, July 2016).

For employers, this has some positive impacts – more flexibility in labour force arrangements and a reduced total wage bill, as two examples.

But what about for employees? What impact does this have on earnings, insurance arrangements and superannuation? Do employees prefer this new found flexibility, or would they prefer to be in full-time employment?

The answers to these questions may seem intuitively obvious – most employees do prefer full time work - but digging deeper reveals a latent desire for more flexibility among a growing portion of the workforce. In fact, according to our research nearly a fifth of full-time employees would prefer to work on a permanent part-time basis.

This presents another challenge for employers who have structured their workforces around fixed shifts that are assigned by management on a monthly, fortnightly or weekly basis, as employees start to pressure management for more flexible working arrangements.

The first step for employers is to embrace the shift towards contingent arrangements of work, utilising mobile technology

that provides employees with the ability to swap and share shifts, without management intervention.

There are many associated issues that will need to be addressed to help facilitate this shift in working arrangements; perhaps most important is providing employees with functional taxation, insurance and superannuation arrangements.

In some respects, current legislation is simply not fit-for-purpose for contingent workers. For example, the superannuation legislation places a threshold of $450 in income per month before employees become eligible for superannuation contributions from their employer. Our research indicates that last year alone, contingent and part-time employees earning under this amount missed out on $146.7 million in superannuation payments.

Ensuring employees have adequate superannuation and insurance arrangements also has significant public policy implications in the short term, through increasing insurance cover in the event of injury, illness or death, a consideration which is only increasing as Australians work longer in life.

As these dynamics shift, REST believes it is important for employers to provide employees of all types with support in ensuring they have functional insurance, superannuation and taxation arrangements in place. It is no longer enough to hand these responsibilities over to individual employees.

Key findings

44%Only 44% of workers believe everyone can

access income protection insurance

20%Nearly a fifth of full-time permanent employees

would prefer to work on a permanent part-time basis

84%of Australian employees

consider the ability to take annual leave and work for a reasonable total number of hours important

16%Only 16% of contingent

employees surveyed who earned less than $450 per

month made voluntary superannuation contributions

370,000new freelance workers joined

the workforce in 2014-15

42%of contingent workers admit they never really

think about super

55%of employers surveyed

offer job-based technology to their employees

85%More than four out of five

contingent workers would prefer their employers look after

the admin and payment of their tax and superannuation

70%Seven out of ten contingent and

part-time workers admit that they would be less likely to make regular superannuation contributions if their

employer didn’t do it for them


Australia’s job market continues to evolve and transform, adjusting to the changing expectations of both employers, employees and the rise of the contingent workforce.

As much as this change is driven by the technology revolution, it is also driven by the legacy of bold economic reforms from the past thirty years such as floating the dollar in 1983, privatising government businesses in the early 1990s and the introduction of national competition policy in 1995.

More recently, the events of the 2008 global financial crisis have shaped Australians’ participation in the labour force. The global financial crisis acted as a drag on the Australian economy, even though Australia remained free from the clutches of a recession. These events did, however, affect the job market adversely.

Australia’s unemployment rate rose to 5.8%2, before falling with a rebound in economic activity in 2010, followed by gradual improvements in labour force participation over the following three years.

According to the Australian Bureau of Statistics’ (ABS) latest release on Labour Force (May 2016), trend employment increased by around 217,000 people (an annual growth rate of 1.9%) over the last year. When viewed at a macro level this change appears to be

overwhelmingly positive, however, a deeper examination of the statistical data reveals concerning trends.

There is a growing trend in part-time employment with decreases in full-time employment. General Manager of ABS’ Macroeconomic Statistics Division, Bruce Hockman stated that May 2016 was the eleventh consecutive month featuring part-time employment increases of more than 10,000 people3, and the fourth consecutive month featuring full-time employment decreases of more than 5,000 people. The May 2016 Labour Force release explains that the trend in monthly hours worked in all job series decreased by 2.3 million hours (0.1 per cent) to 1,632.1 million hours. Hours worked have decreased by 13.7 million hours (0.8 per cent) over the last six months, down from a high point at December 2015 of 1,649.9 million hours. Taken together, these statistics make clear that while the top-line employment rate has improved, it has become more unstable.

The majority of the workforce is still working in permanent part-time and full-time jobs, but what is the changing face of these roles?

A snapshot of the Australian workforce

Full-time employee

56% are men

64%25-49 yrs

62%married

$78Kaverage annual income

47%university graduated

30%18-24 yrs


Contingent worker

70% are women

25%retail industry

13% education and training12% construction

7% arts and recreation services

35%TAFE or technical training34% university graduated

66%35+ yrs

38%university or TAFE

qualified


Part-time employee 82% are women

45%living with children

2 ABS Cat 6202.0 Labour Force Australia, June 2009, 3 Media Release – ABS – Trend employment growth in Australia continues to ease 16 June 2016


Australian full-time permanent employees are most likely to be married and over the age of 25. Most are either university graduates or have completed technical training and are working at mid to senior level non-management positions or as a supervisor, with earnings around $78,000 per annum. They are also evenly distributed across all industries.

The typical part-time permanent employee surveyed for our report is a female aged above 35 years, married and living with children, suggesting a higher possibility of returning to work after a period of maternity leave. These individuals are mostly university or TAFE graduates and are working as a mid-level employee, earning on average $46,000 per annum. Most part-time employees share a similar work profile to contingent workers, with 20% working in retail trade and 18% in health care and social assistance.

In response to the changing needs and demands of an increasingly unstable job market, a new segment of the workforce has emerged, commonly referred to as the ‘Contingent Workforce,’ defined as labour or skilled contractors who undertake projects for an agreed tenure and rate of pay, as and when it suits them.

Most work for hourly pay, commonly for a higher wage rate than market standard for their occupation. Depending on their profession and the task required,

the contingent workforce can also be hired under Statement of Work (SOW) Consulting or Contracting arrangements, where the engagement is based on project outcomes rather than labour supply.

Intriguingly, many Australian professionals are also opting to become contractors to gain greater flexibility, work/life balance and higher rates of pay. Professionals are becoming increasingly comfortable and confident switching from permanent jobs to take up contingent work. In fact, with increasing demand and popularity for such jobs, job websites are being designed to target this segment of the workforce.

Contingent workers surveyed for our research are mostly young females, having completed a form of tertiary education and employed in a non-managerial position and earning around $37,000 per annum. Contingent workers are employed across different industries, but many are in retail, education and training, health care, construction, and the arts and recreation services. When males are employed on a contingent basis they are most likely to be aged 50 years plus.

One per cent of full-time and 2% of part-time permanent employees also work on a contingent basis. More detailed demographics and other profiling questions are available in the Appendix.

Many Australian professionals are also opting to become contractors to gain greater flexibility, work/life balance and higher rates of pay.

70%Most contingent workers

are young women

35+Most typical part-time

worker is a 35+ woman returning after

maternity leave

-5,000Fewer full-time

positions each month

+10,000Part-time positions added each month

2%of part-time

employees also work on a contingent basis

Work / Life balance

50+Most male contingent

workers are over 50 years old

A snapshot of the Australian workforce


It’s clear from our research that employers and employees expect the amount of contingent work conducted to increase over the coming years.

One of the critical pieces of the puzzle often overlooked is the extent to which employers, who will bear the ultimate responsibility for adapting to and shaping this new workforce, are reacting and modifying their workplace practices in response.

To help shape this understanding, REST surveyed over 600 employers across a wide demographic to gain a better understanding of their opinions, attitudes and experiences.

For the purposes of this whitepaper, all business owners, SME owners, managers and sole traders who manage staff or are self-employed are considered as employers.

Australian employers are mostly males above 35 years of age, married and have graduated with a university degree or completed some technical training. They are spread across all industries, at mid-level and senior level management positions, directly responsible for managing a staff of at least 1-9 employees and earning around $93,000 per annum.

Tables detailing demographics and other profiling questions are available in the Appendix.

A snapshot of Australian employers


40% TAFE or technical training

62%married

81%35+ yrs

Australian Sole Traders

57% are women

19%19% provide work in the

education and training sector 16% work in health care



73%married

78%35+ yrs

Australian SME Owners

72% are men

18%mid-level management

12% executive or business manager15% senior management

57% manage 1-4 employees20% manage 5-9 employees12% manage 10-19 employees

Australian Employers

73% are men



71%married

76%35+ yrs

37%mid-level management

16% executive or business manager18% senior management

46% manage 1-4 employees20% manage 5-9 employees17% manage 10-19 employees


When used, technology appears to create a win-win situation for both employers and contingent workers.

At its best, technology offers flexibility to workers, giving them the ability to work around their other priorities, and allows employers to hire labour when, and where, they require it.

It’s uncertain from our data what is behind the rise of the contingent workforce, as only 56% of contingent workers are using technology as part of their daily work. What is clear from our research is that employers and employees see very different utilities for these types of software.

Employers appear to view technology as a tool that can be implemented to reduce costs (i.e. streamlining payroll through electronic time sheeting) rather than a tool offering employees more control of their work schedule. More than half of employers (55%) surveyed offer job-based technology to their employees,

most commonly electronic timesheets and the ability to log in to share their availability for shift work.

Contingent workers strongly expressed an interest in using forms of technology not currently available to them in order to manage their work pattern. Among those contingent workers surveyed who have expressed preference for web- and app-based rostering, many work in retail (25%), health care and social assistance, (17%) and education and training (12%).

This data indicates that where applicable to the working situation, employers would be well placed to introduce additional forms of technology that can assist employees manage their work patterns. The availability of web-based, app-based and contextual communications platforms to help manage this need would indicate strong latent demand for these products.

Social media, technology and the workforce

Preference for current and future use of technology

Employers (like to offer in future) Employers (available currently)

Employees (like to use in future) Employees (available currently)

An app based roster which

allows you to select the hours

that suit you

A web based roster which

allows you to select the hours

that suit you

The ability to simply log in and

work when you are available

An electronic timesheet

which is linked to payroll

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

24%

6%

8%

21%

11%

41%

13%

32%

24%

38%

41%

32%

40%

35%

20%

35%

None of these

Other

29%

45%

27%

44%

1%

1%

2%

2%


Various studies have made it clear that the contingent workforce has grown rapidly over the past decade, and will continue to do so into the future.

Recent research by global workforce solutions organisation ManpowerGroup ranks Australia as the 15th-largest market globally for contingent workforce engagement (2015), down from 4th in 20134.

Results of research conducted in 2015 indicated that Australia’s freelance market saw a surge of 370,000 workers over 2014-15, with a third of the national workforce currently participating in contingent work. This suggests there is high demand for such employment arrangements.

Our research backs up this conclusion, finding that more than three out of four employers (77%) and seven out of 10 employees (69%) surveyed expect that it will become the norm for people to pick up extra (likely contingent) work through job-related websites or apps.

A strong generational difference emerges, with those most likely to hold this belief being young employers in the 18-24 years age group. Similarly, among employees, it is younger people who believe this to become a norm rather than older people.

What does this mean for managers as employees are offered increasing flexibility to boost their income, or replace their income entirely through contingent work?

The high levels of acceptance of the transition to contingent work, especially among younger employees and employers, suggests the trend will increase as more young Australians transition through the ranks and start managing teams and businesses.

The future size of the contingent workforce

4 Manpower 2015 Contingent Workforce Index

To what extent do you agree or disagree with the above statement?

13% 14%

10%

16%

9%13%

3%1%

65%

56%

Employers and sole traders All employees

Strongly agree Agree Disagree Strongly disagree N/A

100%

80%

60%

40%

20%

0%

Social media, technology and the workforce

Australia is the 15th largest market globally for contingent work.

It will become the norm for people to pick up extra work through job related websites or apps

(e.g. Uber or Airtasker).


Needs of the Australian workforceImportance of various job featuresOur research shows that the three most important job features desired by the Australian workforce are all related to being able to manage a work/life balance; that is, good pay, the ability to take annual leave and to work a reasonable total number of hours.

Though good remuneration ranks as the most important thing to the Australian workforce in general, it is more important to full-time permanent employees. The ability to work a reasonable total number of hours is relatively more important to contingent workers and part-time permanent employees.

These findings support the notion that the ability to work a reasonable amount of hours was likely a prominent driver of the contingent working population’s decision to pursue this type of work. With a third of the workforce engaging in this type of employment, and 7% of full-time employees seeking to, the data suggests that all employers will need to offer more flexible working patterns in the future.

Interestingly, the ability to take annual leave seems to be equally important to full-time and part-time permanent employees, but not as important in the case of contingent workers (88% vis-à-vis contingent workers, 68%).

This lends weight to the idea that most contingent workers are aware of the trade-offs of transitioning to contingent work, sacrificing benefits, such as annual leave, for what is commonly a higher rate of pay and more flexibility. However, two out of five contingent workers (42%) surveyed consider this benefit as extremely important, evidence that they are aware of the impact a lack of annual leave has on their financial circumstances.

Traditionally contingent workers have been seen as being compensated for a lack of annual leave and other benefits solely through a higher hourly rate of pay and increased flexibility. However, as competition for contingent workers increases, there may be opportunities for employers to increase the attractiveness of certain contingent roles by offering an annual leave component as an incentive to these workers.

Ranking of job features

Good pay

The ability to take sick leave

Opportunities for promotion

The ability to take annual leave

The ability to work around my other commitments

The ability to take a phased retirement

Reasonable total number of hours

The ability to work flexible hours

The ability to take maternity leave

A good, ongoing relationship with the business

Training and development

0% 20% 40% 60% 80% 100%

Extremely important Very important

50%

53%

39%

36%

37%

36%

31%

25%

21%

12%

16%

39%

32%

45%

42%

37%

35%

34%

38%

30%

22%

13%

Work/life balance is key to 21st century workers. Good remuneration is the most important thing for Australian employees. 89% find it important to have good remuneration, and 84% consider the ability to take annual leave and work for a reasonable total

number of hours important.


Perceived benefits of contingent work vs. permanent work

Employees appear to understand the benefits and disadvantages of the trade-off between working on a contingent and permanent basis. Their decisions mainly relate to the tension between higher hourly pay and having the flexibility to fulfil other commitments offered by contingent work, and the job stability and security in terms of certainty in weekly earnings and paid leave that comes with full-time, permanent roles.

However, the perceived benefits of working on a contingent basis differ dramatically between permanent and contingent worker respondents, highlighting the different needs of both groups.

While work flexibility that allows employees to fit their hours around other commitments is perceived as the most important benefit of contingent work by

permanent employees, being paid for every hour worked with a higher wage rate is a key benefit for contingent workers.

The wide gap between what the two sides of this equation offer is an opportunity for employers to enhance their employer value proposition (EVP) to employees. This opportunity is even more pronounced when it comes to offering flexible work arrangements to full-time employees, and offering these employees opportunities to earn additional income.

There also appears to be strong interest from employee respondents in using contingent work to help manage health concerns and doctor’s appointments.

Benefits of working on a casual, contract or contingent basis

Can fit my hours around other commitments

Can increase or decrease my hours to suit my current

finances or expenses

Higher hourly wage rate

I can work around doctor’s appointments or health concerns

Other

Get paid for every hour I work

Can work additional hours to save for something

I can work when I feel up for it

I can work or take time off as my health allows

Don’t know

Employees Permanent employees Contingent workers

0% 20% 40% 60% 80%

67%

57%44%

66%

65%

72%

52%

50%

48%

50%

39%

57%

66%

46%

4%

5%

44%

45%

44%

4%

3%

37%

39%

47%

6%

3%

56%

52%

38%65%

Needs of Australian workforce

Employees appear to understand the trade offs between the higher hourly pay and flexibility offered by contingent

roles and the job stability of permanent work.


Preferred employment type

Overall, seven out of 10 contingent workers surveyed would prefer to be employed on a permanent basis (full-time or part-time). Taken alone, the implication of this finding would appear that contingent workers are forced into this type of role. However, when considered alongside the most important features of a job, a picture emerges of contingent workers who would prefer to work full-time, but have chosen contingent work for flexibility and a higher rate of pay.

This is also true among many part-time employee respondents, of whom one in four (25%) would prefer a full-time permanent job. Contingent workers who would prefer a permanent role are mostly women, primarily from Gen Y (aged between 18-34 years of age), and working in retail or education and training.

What this suggests is that there may be an opportunity for employers to structure permanent roles in a more flexible fashion,

reducing labour costs and more closely meeting the needs of this large segment of the workforce.

While many seem to consider a full-time permanent job as the ideal role, nearly a fifth of full-time permanent employees surveyed (18%) would prefer to work on a permanent part-time basis. Employees working full time who would prefer a part-time role are typically female, aged between 25-49 and part of a couple living with children.

The predominant driver for these full-time employees seeking part-time work again is increased work flexibility, further evidence of the emerging opportunity for employers to offer employees greater flexibility through the use of technology to roster and allocate work.

Work preferences

Full time

hrs/

wk

Part time Casual:30+ Casual:<30 Contingent workers:30+

Contingent workers:<30

Short term contract:30+

0%

10%

20%

30%

40%

50%

60%

70%

80%

Full time employees Part time employees Contingent workers

75%

39%

68%

3%

0%

0%

0%

8%

1% 1% 1% 1% 1% 1%2%

7%

2%

15%

25%

18%

31%

63%married

Profile of full-time employees who would prefer a part-time role

68% are women

70%25-49 yrs

36%couple living with children

17%working in health care and social assistance

14% administrative and support services

Profile of contingent workers who prefer

a permanent full, or part-time role

75% are women

37%married

38% single

52%18-34 yrs

24%couple living with children

23%working in retail

16% education / training



Reasons for not working on a contingent basis

Three out of five permanent employee respondents who would prefer to work on a contingent basis are unable to do so due to work being unavailable (39%) or not practical (21%) within their fields. These employees are primarily based in construction, retail or administrative and support services.

Could employers in these fields therefore not consider trialling contingent work programs, recruiting and training a stable

base of contingent workers to help handle peak demand for products and services?

Lingering concerns over a lack of guaranteed hours, and lower earnings, suggest that employers looking to increase their utilisation of the contingent workforce may need to educate current employees in order to help them switch across to non-traditional work patterns.

Do employees prefer to manage their own tax and superannuation?

More than four out of five (85%) contingent workers surveyed would prefer their employers to look after the administration and payment of their tax and superannuation, a feeling shared by

the vast majority of all employees (88%). This supports the idea that the need to manage your own financial affairs is one of the barriers to employees adopting contingent work patterns.

Reasons for not working on a casual, contract or contingent basis

Not available in my field

No guarantee of hours

I would earn less money

Not practical in my occupation

Other

Don’t know

39%

27%

26%

21%

14%

2%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Preferences for handling the administration and payment of tax and superannuation

Full time employees Part time employees Contingent workers All employees

0%

10%

20%

30%

40%

50%

89% 90% 85% 88%11% 10% 15% 12%

Prefer employer to do this Prefer to do this myself


The main reasons more are not working on a contingent basis are lack of such availability in their field, uncertainty of hours and possibility

of earning less money.

88% of employees would prefer their employers to look after the administration

of tax and superannuation payments.


Impact of contingent work on retirement savingsAustralian employees have a clear preference for employers to manage the administrative aspects of their employment according to our research.

Notably, seven out of 10 contingent and part-time workers surveyed admit that without their employer doing it for them, they would be less likely to make regular superannuation contributions.

Not only is there a clear preference for employers to look after the administration and payment of their superannuation, this research makes it clear that in the absence of this support, employees are less likely to save effectively for their retirement.

While many employers of contingent workers would argue that the obligation is on the employee to manage these arrangements, with competition for contingent workers increasing, there is evidence that employers who are able to offer this service to contingent employees would be well placed to do so, to enhance their EVP.

To what extent do you agree or disagree with the above statement?

Full time employees

Part time employees

Contingent workers

All employees

SME managers

0%

20%

40%

60%

80%

100%

46% 55%52% 49%

48%

3% 1% 4% 3% 1%

24% 21% 20% 23%19%

20%17% 22%

19%

16%

7%6% 2% 6% 16%

Strongly agree Agree Disagree Strongly disagree N/A

With competition for contingent workers increasing, employers who are able to assist their employees

with the administration aspects of their employment may be at an advantage.

Without an employer to do it for me, I would be less likely to make regular superannuation contributions.


Awareness of the eligibility threshold for employer paid superannuation

Frequency of employees earning less than $450 in a monthWhile Australians are almost completely unaware of the income threshold for the Superannuation Guarantee, which is backed up by REST’s research, the actual impact of this isn’t clear. How often are Australians missing out on Superannuation Guarantee payments for this reason, and how much are they missing out on?

To probe this issue, our research asked contingent and part-time employees who have earned less than $450 per month to quantify how much they had earned in that month, and how many times per year they had earned less than $450 per month from an employer.

Half (50%) of contingent workers surveyed have earned less than $450 per month from a single employer, regardless of whether they are working as a contractor or casual employee. For these workers who have fallen under the threshold, it has happened on average 6.2 times per year

and the average contingent worker earned around $232 on these occasions. At a Superannuation Guarantee rate of 9.5%, this means each of these workers has missed out on $136 in superannuation in the last year alone. With our research indicating an estimated 744,000 contingent workers earned less than $450 per month on at least one occasion in the past year, total missed superannuation payments come to $101.2 million per annum.

A minimal amount of this lost superannuation was offset by voluntary superannuation contributions, but just 16% of contingent workers surveyed made voluntary superannuation contributions. These contributions were smaller payments on average according to our research, at just 3.1% of salary instead of the 9.5% Superannuation Guarantee, meaning just 5% of the $101.2 million per annum in missed superannuation payments is being clawed back.

Employers Sole traders Full time employees

Part time employees

Contingent workers

0%

20%

40%

60%

80%

100%

10% 8% 5% 4% 6%

5% 7%4% 4% 4%

52%

24%51%

40%47%

33%

61%

40%52%

43%

$450 Other Amount You are eligible from the first dollar you earn Not sure

How many times have you earned less than $450 in a calendar month (over the past year)?

6.2Months

Impact of contingent work on retirement savings

Generally, if you earn less than $450 in a calendar month from an employer, they do not legally

need to pay you superannuation for that month.

Awareness levels of superannuation earnings capWhen the modern Superannuation Guarantee system was introduced by the Keating Government in 1992, it included a $450 monthly threshold.

Since 1992, the composition of the workforce has shifted significantly. More people hold more jobs, and many people who do hold multiple jobs are at a more advanced stage of their career, and often will have substantial superannuation savings.

Put simply, the current structure of the $450 monthly threshold is not reflective of modern work habits. An unintended consequence of this is that hundreds of thousands of contingent and part-time workers who aren’t earning more than $450 per month from a single employer aren’t paid the Superannuation Guarantee, even if they may be earning more than $450 per month cumulatively from multiple employers.

Moreover the impact of this on contingent and part-time workers is increasing, as this segment of the workforce is almost completely unaware there is a $450

per month Superannuation Guarantee earnings threshold. Just 6% of contingent workers surveyed (and 4% of part-time workers) were correctly able to state that the income threshold for the Superannuation Guarantee was $450 per month without prompting.

In fact, just 10% of Australian employers surveyed are aware of the monthly earnings threshold that applies for them to be legally eligible for employer-paid superannuation. This does not necessarily imply workers are not being paid superannuation they are entitled to (as the payroll department handles superannuation payments), and does not suggest that employers are deliberately rostering employees at below the $450 monthly earnings threshold to avoid superannuation payments.

However, low awareness among contingent and part-time workers is a concern as it could be reducing their superannuation savings if they are not deliberately looking for opportunities that pay at least $450 per month.

Contingent workers


Frequency of earning less than $450 per month

On these occasions, did you make any voluntary superannuation contributions?

Expectations and attitudes of employees about superannuation decisionsWith employers historically picking up the administrative duties of paying tax and superannuation, Australian workers have grown used to having this responsibility handed over to employers.

When the workforce becomes more contingent, this cultural attitude becomes problematic; 42% of contingent workers surveyed admit they never really think about superannuation, and 61% are so used to their employer making payments for superannuation tax, HECS and/or HELP payments, they don’t really think about it.

Again, what emerges is an opportunity for employers offering a contingent working option to provide support for employees transitioning to this work pattern in overcoming superannuation concerns.

This expectation extends to some degree into the field of insurance. One in three part-time and full-time workers surveyed

feel that it is their employer’s responsibility to select a superannuation fund that will enable them to sustain their or their family’s lifestyle in case of permanent disability (37%, or 2,529,000 full-time and part-time employees) or if they are off work for an extended period of time (36%, or 2,480,000 full-time and part-time).

Whilst this is only a minority of workers, it adds up to a substantial number who believe they are covered when in fact they might not be (depending on the superannuation fund chosen by their employer). Should these people experience a significant mishap, they may be entirely reliant on the public health and welfare systems, presenting significant implications for policy makers.

Has not happened in the past year

Happened once in total

Happened twice in total

3-5 times

6-9 times

10-14 times

20 times or more

$1 - $99.99

$100 - $199.99

$200 - $249.99

$250 - $299.99

$300 - $349.99

$350 - $399.99

$400 - $449.99

Don’t know

Contingentworkers

50%

13%

12%

6%6%

3%

10%

Contingentworkers

15%9%

20%18%

4%

15%14%

5%


On the other hand, only 10% of part-time workers surveyed have earned less than $450 per month. For this 10% of part-time workers, it has happened on average 6.9 times per year and the average worker earned $313 on these occasions. At a Superannuation Guarantee rate of 9.5%, each of these workers missed out on $206

in superannuation in the last year alone, equating to $45.5 million per annum in missed superannuation payments. Only 15% of part-time workers made voluntary superannuation contributions, at an average of 9.3% of salary each, meaning 15% of the $45.5 million per annum in missed super payments was clawed back.

16%Made contribution

84%No / did not

make any


Expectations of employees about superannuation

Full-time employees Part-time employees Contingent workers

If I was self-employed, I would have to look up how to do the administrative side of making tax and superannuation payments

83% Agree

17% Disagree

89% Agree

11% Disagree

81% Agree

19% Disagree

I am so used to my employer making payments for my superannuation tax, HECS and / or HELP payments I don’t really think about it

65% Agree

35% Disagree

73% Agree

27% Disagree

61% Agree

39% Disagree

To be honest, I never really think about superannuation

38% Agree

62% Disagree

46% Agree

54% Disagree

42% Agree

58% Disagree


Expectations of employees about insurance

Full-time employees Part-time employees Contingent workers

Superannuation funds should provide comprehensive insurance offerings by default which protect me if I’m unable to work for an extended period of time

83% Agree

17% Disagree

86% Agree

14% Disagree

78% Agree

22% Disagree

I expect my employer to provide for me if I’m sick for an extended period of time

62% Agree

38% Disagree

62% Agree

38% Disagree

38% Agree

62% Disagree

It’s my employer’s responsibility to select a superannuation fund which provides products to ensure I’m able to sustain my lifestyle if I get a permanent disability

39% Agree

61% Disagree

33% Agree

67% Disagree

28% Agree

72% Disagree

It’s my employer’s responsibility to select a superannuation fund which provides products to ensure I’m able to sustain my lifestyle if I’m off work for an extended period of time

36% Agree

64% Disagree

37% Agree

63% Disagree

23% Agree

77% Disagree

It’s my employer’s responsibility to select a superannuation fund which provides products to sustain my family’s lifestyle if I die unexpectedly

35% Agree

65% Disagree

32% Agree

68% Disagree

28% Agree

72% Disagree


Awareness levels of accessibility to different types of insuranceOutside of group insurance arrangements, many workers may experience difficulty accessing income protection and total and permanent disablement and life insurance at an affordable rate. They may in fact find themselves unable to purchase income protection and total and permanent disablement insurance at all, depending on their occupation.

However, through group insurance purchased through a superannuation fund, most employees are able to access life, total and permanent disablement and income protection insurance.

This is not well understood by the workforce - only 44% of workers surveyed believe everyone can access income protection insurance, 41% believe

everyone can access total and permanent disablement insurance, and 51% believe everyone can access life insurance.

Clearly, a large portion of the population believes they are unable to access these types of insurance, and aren’t likely to attempt to. The good news for these individuals is that they are commonly able to access this type of insurance at a low cost, through their superannuation fund.

While it would be outside an employer’s remit to encourage employees to take out insurance cover, employers may be able to educate employees about the types of insurance offerings available to them in the event of sickness, injury or death

Awareness of access to income protection insurance

0%

10%

20%

30%

50%

40%

Full time employees Part time employees Contingent workers All employees

Everyone can access this insurance type

44%43%39%

49%



Our research has made it clear that entering the contingent workforce is appealing to many Australians.

Work/life balance and greater work flexibility emerge as some of the key benefits experienced by contingent workers according to the findings of this research, which shows that more than half (54%) of contingent workers are employed in mid-level, non-management roles.

The flip side is that nearly one in five full-time employees surveyed would prefer to be employed on a permanent, part-time basis, highlighting the increasing need for employers to offer flexibility in traditional roles.

Our research also suggests that workers aged 18-24 are most likely to be in contingent employment (30%). However, the spread of contingent workers is relatively even (except between 25-34 years, 15%) with one out of four (26%) contingent workers above 50 years, and another 28% aged between 35-49 years.

This observation is further validated by Australian Social Trends (Sep 2010) a study conducted by the ABS. According to this study:

‘People aged 55 years and over made up 16% of the total labour force in 2010, up from around 10% three decades earlier. The participation rate of Australians aged 55 and over has increased from 25% to 34% over the past 30 years, with most of the increase occurring in the past decade. Over the course of 2008-09 there were 144,000 people 55 years and over (59% of them women) who came out of retirement and returned to the workforce.’

Thirty-seven per cent of these older workers returned to the labour force for financial reasons, indicating insufficient retirement savings. This is a finding reinforced by REST’s recent The Journey Begins research, which found that 81% of older working Australians aged over 50 would prefer to work an extra couple of years than spend their retirement worrying about money.

In addition to those forced back into the workforce for financial reasons, the Australian Social Trends study also highlighted the growing group of discouraged job seekers. In September 2009, there were almost 58,200 older people classified as discouraged job seekers. Around two-thirds of older people in this situation felt that employers considered them too old (64%), while a further 15% said that there were no jobs in their locality or line of work. The findings from this project suggest that 27% of unemployed Australians find it difficult to engage in paid employment due to their age, a barrier which could perhaps be overcome by their taking contingent workforce opportunities.

Of course, there are many factors that affect retirement decisions. Some of the most crucial include consideration of health, financial security and other personal reasons, as well as the prevailing economic conditions and labour demands.

As these dynamics shift, REST believes that it is important employers provide employees of all types with support

in ensuring they have functional insurance, superannuation and taxation arrangements in place. It is no longer enough to hand these responsibilities over to individual employees. The impact of such arrangements, particularly in regards to taxation, have significant long-term public policy implications as the Australian government grapples with the increased cost of caring for an aging population. Ensuring employees have adequate superannuation and insurance arrangements also has public policy implications in the short term through increasing insurance cover in the event of injury or illness.

Policy makers must ensure that the superannuation guarantee threshold structure doesn’t disadvantage employees who work multiple jobs, earning more than $450 per month from these multiple employers but missing out on superannuation payments that could form the basis for their retirement.

In summary, creating an environment in which permanent, part-time and contingent employees have functional work arrangements that span insurance, desired work patterns, taxation and superannuation, is critical to continuing Australia’s record-breaking run of 25 years of economic growth.

Conclusion


AppendixWhich of the following best describes the industry in which your current, or last, workplace operates?

Thinking about your current job (i.e. your primary job) or last job, how would you describe your role?

Which of the following categories best describes your personal annual income before tax (including all wages, salaries, pensions and other income?

Full-time employees

Part -time employees

Contingent workers

All employees

Education and training 8% 13% 13% 10%

Health care and social assistance 9% 18% 12% 11%

Arts and recreation services 1% 1% 7% 2%

Retail trade 8% 20% 25% 13%

Construction 5% 2% 7% 5%

Professional, scientific and technical services

7% 5% 2% 6%

Administrative and support services

9% 6% 4% 8%

Transport, postal and warehousing

6% 3% 3% 5%

Rental, hiring and real estate services

2% 1% 1% 2%

Information media and telecommunications

5% 2% 1% 4%

Financial and insurance services 7% 5% 2% 6%

Accommodation and food services

1% 3% 5% 2%

Electricity, gas, water and waste services

3% 1% 2% 2%

Agriculture, forestry and fishing plus mining

5% 2% 2% 4%

Wholesale trade 3% 1% 1% 2%

Manufacturing 7% 2% 2% 5%

Public administration and safety 5% 5% 4% 5%

Other services 9% 10% 7% 8%

Full-time employees


Contingent workers

All employees

Intern / Trainee / Apprentice 1% 1% 0% 1%

Junior / Entry level 6% 11% 26% 9%

Mid-level employee (non-management)

48% 60% 54% 52%

Senior level employee (non-management)

31% 21% 17% 26%

Supervisor or line manager 14% 7% 3% 12%

Full-time employees


Contingent workers

All employees

Less than $30,000 2% 22% 37% 13%

$30,000-$39,999 2% 20% 18% 9%

$40,000-$49,999 11% 12% 8% 11%

$50,000-$59,999 13% 6% 9% 10%

$60,000-$69,999 11% 4% 2% 8%

$70,000-$79,999 11% 5% 0% 8%

$80,000-$89,999 10% 4% 2% 7%

$90,000-$99,999 8% 1% 3% 5%

$100,000-$119,999 7% 3% 1% 5%

$120,000-$149,999 6% 3% 1% 4%

$150,000 or more 4% 0% 1% 2%

Prefer not to say 15% 20% 18% 18%

Average annual income $78,141.7 $46,396.6 $37,095.5 $64,167.0


Which of the following best describes the highest level of education you have completed?

Full-time employees


Contingent workers

All employees

Below Year 12 10% 12% 9% 11%

Completed Year 12 16% 20% 18% 16%

TAFE or technical 29% 32% 35% 31%

University 44% 36% 34% 41%


Which of the following describes your current marital status?

Full-time employees


Contingent workers

All employees

Single 22% 19% 32% 23%

In a relationship 12% 10% 14% 11%

Married / de facto 59% 62% 41% 56%

Separated / divorced / widowed 6% 9% 10% 8%


Which of the following best describes your household composition?

Full-time employees


Contingent workers

All employees

Single person living alone 14% 5% 9% 12%

Single person, living with one or more children

6% 9% 8% 7%

Couple, living without children 31% 21% 22% 27%

Couple, living with one or more children

33% 45% 28% 35%

Extended family, living without children

3% 4% 9% 4%

Extended family, living with one or more children

3% 3% 10% 4%

Group of unrelated adults 5% 5% 6% 5%

Other 5% 8% 8% 6%

Age groups

Full-time employees


Contingent workers

All employees

18-24 14% 15% 30% 16%

25-34 32% 20% 15% 27%

35-49 33% 37% 28% 33%

50+ 21% 28% 27% 24%

35-49 + 50+ 54% 65% 55% 57%

Are you male or female?

Full-time employees


Contingent workers

All employees

Male 56% 18% 30% 43%

Female 44% 82% 70% 57%


Which of the following best describes the industry in which your current, or last, workplace operates?

Employers Sole

traders

SME owners / Managers

Employers and sole traders

Education and training 7% 19% 6% 10%

Health care and social assistance 7% 16% 7% 9%

Arts and recreation services 4% 10% 5% 5%

Retail trade 11% 8% 14% 10%

Construction 10% 7% 13% 9%

Professional, scientific and technical services

9% 6% 11% 8%

Administrative and support services

1% 5% 0% 2%

Transport, postal and warehousing

4% 4% 2% 4%

Rental, hiring and real estate services

2% 3% 3% 3%

Information media and telecommunications

5% 3% 2% 5%

Financial and insurance services 7% 3% 6% 6%

Accommodation and food services

3% 2% 3% 3%

Electricity, gas, water and waste services

2% 2% 1% 2%

Agriculture, forestry and fishing plus mining

4% 2% 5% 3%

Wholesale trade 6% 0% 7% 4%

Manufacturing 5% 0% 4% 4%

Public administration and safety 5% 0% 1% 3%

Other services 8% 10% 10% 10%

Thinking about your current job (i.e. your primary job) or last job, how would you describe your role?

EmployersSole

traders



Mid-level management (e.g. department manager / site manager)

38% 0% 18% 29%

Executive / Business unit manager 16% 0% 12% 12%

Senior management 18% 0% 15% 14%

Self-employed + Business owner 28% 100% 55% 45%

How many staff do you currently manage (i.e. you are responsible for deciding who is hired for each role)?

EmployersSole

traders



None - no one reports to me 0% 0% 0% 0%

Yourself only (e.g. sole trader, self-employed)

0% 100% 0% 25%

1-4 46% 0% 57% 35%

5-9 20% 0% 20% 15%

10-19 18% 0% 12% 13%

20-199 14% 0% 11% 10%

200+ 2% 0% 0% 2%


Which of the following categories best describes your personal annual income before tax (including all wages, salaries, pensions and other income)?

EmployersSole

traders



Less than $30,000 3% 30% 4% 10%

$30,000-$39,999 2% 4% 2% 2%

$40,000-$49,999 4% 14% 6% 6%

$50,000-$59,999 4% 7% 7% 5%

$60,000-$69,999 8% 4% 11% 7%

$70,000-$79,999 6% 7% 6% 6%

$80,000-$89,999 7% 5% 9% 7%

$90,000-$99,999 9% 2% 5% 7%

$100,000-$119,999 11% 7% 12% 10%

$120,000-$149,999 14% 5% 12% 12%

$150,000 or more 19% 1% 14% 15%


Average annual income $105,443.7 $54,299.9 $95,521.0 $93,189.0

Which of the following best describes the highest level of education you have completed?

EmployersSole

traders



Below Year 12 8% 14% 9% 9%

Completed Year 12 10% 3% 12% 8%

TAFE or technical 25% 40% 26% 29%

University 55% 43% 53% 53%


Are you male or female?

EmployersSole

traders



Male 73% 43% 72% 66%

Female 27% 57% 28% 34%

Age groups

EmployersSole

traders



18-24 4% 7% 4% 5%

25-34 20% 12% 18% 18%

35-49 35% 35% 33% 35%

50+ 41% 46% 45% 42%

35-49 + 50+ 76% 81% 78% 77%

Which of the following describes your current marital status?

EmployersSole

traders



Single 13% 20% 14% 15%

In a relationship 8% 6% 6% 7%

Married / de facto 71% 62% 73% 69%

Separated / divorced / widowed 7% 11% 6% 8%



Which of the following best describes your household composition?

EmployersSole

traders



Single person living alone 15% 20% 14% 16%

Single person, living with one or more children

4% 6% 4% 5%

Couple, living without children 30% 32% 35% 30%

Couple, living with one or more children

44% 32% 39% 41%

Extended family, living without children

1% 4% 2% 2%

Extended family, living with one or more children

3% 3% 3% 3%

Group of unrelated adults 2% 3% 3% 2%

Other 1% 0% 0% 1%

MethodologyThis research was conducted among the Australian workforce and employers using a customised online quantitative survey between 27 May and 6 June 2016.

Employees were categorised depending on the job type and role in the organisation:

• Employees working on a full-time permanent basis

• Employees working on a part-time permanent basis

• Contingent workers (includes casual freelance and contract basis).

Employers were categorised depending on the nature and size of business or role and level of responsibilities in an organisation as outlined below.

TotalCurrently working

Currently unemployed but intend to work

Employees 1,059 1,004 55

Employers 578 - -

Sole traders 64 - -

Total sample 1,701 1,004 55

Total currently working

Employees currently working

Sole Traders currently working

Employers currently working

Sole trader / self employed

64 0 64 0

1-4 208 66 0 142

5-9 182 99 0 83

10-19 200 132 0 68

20-199 485 351 0 134

200+ 486 356 0 130

Total sample 1,625 1,004 64 557

This research was conducted by Lonergan Research in compliance with the ISO20252 standard.

Interviews were conducted across a range of business sizes. After weights are applied, the final sample composition is as follows:

In total, 1,701 surveys were conducted around Australia including 642 employers and 1059 employees. The sample distribution is as follows:

Issued by Retail Employees Superannuation Pty Ltd ABN 39 001 987 739 AFSL 240003 as trustee of REST (Retail Employees Superannuation Trust ABN 62 653 671 394).

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