Insights from Single Touch Payroll: COVID-19 impacts on superannuation contributions

The Single Touch Payroll (STP) dataset provides timely and detailed insights into employee remuneration (for example wages, superannuation and allowances). For more information on the STP dataset, see Weekly Payroll Jobs and Wages in Australia Methodology.

This article highlights the power of STP data to provide insights into the changing nature of private sector compulsory employer superannuation contributions through the COVID-19 pandemic. The ABS has not previously had a data source covering superannuation contributions by industry available more frequently than annual.

JobKeeper payments were paid at a minimum rate of $1500 per fortnight regardless of the hours worked by the employee. Employees received earnings for the hours worked in a fortnight, and if the total amount was below $1500, they received an additional ‘top-up’. Compulsory employer superannuation contributions were not required to be paid on the additional top-up amount. For more information on JobKeeper and compulsory employer superannuation contributions, see JobKeeper Payment: Paying your eligible employees.

JobKeeper top-up payments were reported as allowances through STP. Allowances include payments such as eligible travel, meal, and laundry allowances as well as JobKeeper top-up amounts. Before JobKeeper, allowances accounted for around 1% of private wages. Since the inclusion of JobKeeper top-up payments, allowances rose to 5% of private wages indicating that the growth in allowances can be attributed to the inclusion of JobKeeper top-up payments. For more information see Reporting eligible employees and JobKeeper top-up payments via STP.

Since September 2019 (the first period of available data), compulsory employer superannuation contributions have been consistently around 8.6% of total private sector wages and have remained relatively stable thus far in the COVID-19 pandemic. The superannuation guarantee was payable to eligible employees at 9.5% of ordinary time earnings (it was raised to 10% on 1 July). Total private sector wages cover wages paid to all employees, including payment types excluded from ordinary time earnings, leading to a difference between the superannuation guarantee and compulsory employer superannuation contributions as a percentage of wages.

Some of the hardest hit industries during the COVID-19 pandemic, such as Accommodation and Food Services and Arts and Recreation Services, recorded a decrease in compulsory employer superannuation contributions as a share of wages. These effects were temporary, and since the JobKeeper scheme ended, the share has returned to its pre-COVID-19 levels.

Analysis of compulsory employer superannuation contributions, allowances and JobKeeper payments as a share of private STP for selected industries is presented below.

Compulsory employer superannuation contributions were particularly affected in some industries during COVID-19. The onset of COVID-19 and containment measures impacted some industries and employees’ ability to maintain their hours worked as businesses were unable to continue normal operations during lockdowns.

Accommodation and Food Services and Arts and Recreation Services industries were heavily impacted during the COVID-19 period by border closures and lockdown measures leading to reduced hours worked and business turnover. As a result, JobKeeper payments supported a higher share of wages in these industries. For more information about JobKeeper payments by industry see Government support for business.

Accommodation and Food Services gross value added (GVA) fell to 57.1% of its pre-pandemic level in June quarter 2020. GVA has since recovered and reached 94.9% of its pre-pandemic level in June quarter 2021. JobKeeper as a share of wages peaked at over 50% in June quarter 2020. The level of JobKeeper fell as the fortnightly payment rate decreased, additional eligibility requirements for businesses to continue receiving JobKeeper were introduced, and business activity improved. JobKeeper as a share of wages declined to 9% before the subsidy ceased at the end of March quarter 2021.

Allowances increased from the usual share of less than 1% of wages in March quarter 2020 to 20% in June quarter 2020 reflecting high JobKeeper top-up payments. It has since decreased and returned to the pre-COVID-19 share in June quarter 2021. This coincided with compulsory employer superannuation contributions falling from 8.7% of wages in March quarter 2020 to 6.7% in June quarter 2020, when employees received high levels of top-up amounts. Compulsory employer superannuation contribution as a percentage of wages gradually returned to near pre-COVID-19 levels in June quarter 2021.

Arts and Recreation Services GVA fell to 73.9% of its pre-pandemic level in June quarter 2020. GVA has since recovered to 96.4% of its pre-pandemic level in June quarter 2021. JobKeeper as a share of wages was 67% in June quarter 2020 at the height of the COVID-19 pandemic.  

Allowances increased from less than 1% of wages in March quarter 2020 to 32.2% of wages in June quarter 2020 then returned to below 1% in June quarter 2021 with the cessation of the JobKeeper scheme.

Compulsory employer superannuation contributions fell from 8.7% of wages in March quarter 2020 to 6.0% in June quarter 2020. It has since returned close to the pre-COVID-19 ratio of 8.7% of wages in June 2021.

Construction GVA fell to 91.2% of its pre-pandemic level in June quarter 2020. Despite receiving the largest value of JobKeeper payments the Construction industry did not record the same growth in allowances experienced by Accommodation and Food Services and Arts and Recreation Services industries.

Allowances as a share of wages peaked at 3.8% in September 2020. The smaller rise reflected limited JobKeeper top-up amounts. Although the Construction industry was impacted by COVID-19 measures, employees typically earn higher average wages and work more hours than employees in the Accommodation and Food Services and Arts and Recreation Services industries. This meant hours paid had further to fall before falling below the JobKeeper minimum and requiring top-up payments. There was no significant change in compulsory employer superannuation contributions as a percentage of wages.

This spotlight demonstrates the additional analytical value that can be derived from Single Touch Payroll. It is anticipated that measures of superannuation contributions from this source will continue to be used to better measure compensation of employees estimates in the national accounts. This includes providing a timely indicator of the impact of the rise in the superannuation guarantee in September quarter 2021.