Canberra: The Australian government is considering allowing employees to choose a wage increase over higher pension contributions, prompting labor opposition to accuse it of workers’ savings to cover a failed wage policy.
The government is seeking more flexibility to allow workers the ability to choose the increased pay they receive home over the mandatory pension increases, the Financial Magazine reports.
The newspaper said it was also looking into the possibility of allowing them to use their pension savings to cover expenses such as housing payments as part of efforts to improve the balance between work income and retirement.
The report drew a sharp rebuke from the opposition. Labor spokesman Stephen Jones said in a statement on Saturday that the government is “blaming Australia’s world-class pension system for failing wages”.
“Undermining workers’ savings for tomorrow to fix your political problems today will not help raise wages.”
Companies currently pay 9.5% of a worker’s salary into a pension fund under a pension system designed to ease the burden of the elderly population on the government budget. As of July this year, the annual increase is enacted by 0.5 percentage point to 12% by 2025.
Australian wages have stagnated in recent years as workers – who often shoulder the burden of high debt – worry more about job security than heavy wage packages. Before the pandemic, policymakers were trying to tighten the labor market enough to increase salary gains.
But as the economy recovers from its first recession since before the introduction of retirement in 1992, concerns are growing that companies will not be able to shoulder the extra burden and instead choose not to hire more employees.
The Australian center-right government has encouraged trying to tamper with the pension system after a positive public response to the Covid-19 measure that allowed people to withdraw up to 20,000 Australian dollars (15,400 US dollars) in their pension savings.
Workers and the pension industry are opposed to any pause or failure to move forward with increased contributions.