Workers who lose a job would be paid up to 80 percent of their wage for up to seven months under the government's proposed state-run income insurance scheme.
Job advertisements have flattened out. Photo: 123RF
Designed by the government, Business New Zealand, and the Council of Trade Unions (NZCTU), the scheme would cover people who are made redundant, laid off, or when a health condition or disability significantly affects their work hours.
It would be managed by ACC, and would be paid for by levies on wages and salaries, with workers and employers paying an estimated 1.39 percent each.
Robertson announced the details of the proposal, which the government is seeking feedback on, this morning. He said there were important lessons to be learned from the impacts of Covid-19, and the value of the Wage Subsidy and Resurgence Support Payment schemes.
- Read the full discussion document or the summary booklet, and make a submission on the MBIE website.
"Our proposed scheme provides economic security to individuals directly, and supports them to transition into a good, new job, as opposed to economic support packages which keep people in their existing job even if that role is no longer viable," Robertson said.
Permanent employers would be required to give four weeks' notice, and provide four weeks pay at 80 percent after the job ends, after which the scheme would kick in for up to six months.
Applicants would be required to look for work or take part in training and rehabilitation.
Eligibility:
- Workers would be eligible after having made six months of contributions within the previous 18 months.
- Parental leave is covered
- Fixed-term and seasonal work is covered up until the original end date of employment
- Casual workers who can show reasonable expectation of future income will be treated like permanent workers
- People working multiple jobs are eligible if they lose a job that provides more than 20 percent of their income
- Feedback is being sought on coverage for contractors and self-employed people. "We want to protect people who genuinely lose work for reasons beyond their control, while not covering people who may choose to close their work down in order to access the scheme"
- Health and disability related job losses will also be covered, helping address the disparity between support offered for accidents compared to other health conditions or disability
NZCTU president Richard Wagstaff said such a scheme would act as a financial cushion for the nearly 100,000 New Zealand workers who lost a job each year, often through no fault of their own.
"The Covid-19 outbreak is a stark example, but widespread job losses have occurred all-too-frequently over the last 40 years," he said.
"Finding a good job takes time. Many people accept lower-paid jobs that don't match their skillset because of the financial pressure to get back to work quickly."
Business New Zealand chief executive Kirk Hope said this meant sectors facing critical skill shortages may miss out simply because a vacancy was not available in the few weeks a worker was looking.
He said loss of work could also mean people having less to spend, which meant other businesses could suffer.
"An income insurance scheme could cushion workers and communities from such abrupt income losses, allowing more time for regions and businesses to adapt," he said.
A summary booklet said New Zealand was "almost alone in the developed world" in not having such a scheme in place.
"Around 200,000 people lost their jobs and spent time out of work, some for several years, during the late 2000s Global Financial Crisis. The Canterbury earthquakes saw successful businesses close down almost overnight after their facilities were damaged. The Covid-19 pandemic brought our then-largest export earner, tourism, to an abrupt halt. At local levels, many examples can be found, such as the closure of Kawerau's timber mill or Hawke's Bay's Whakatū and Tomoana freezing works," it said.
It highlighted changing technology, the shift to a low-emissions economy, changing consumer demands, an ageing population and globalisation as causes that could see job disruption become more likely in future.
"The proposed income insurance scheme would help shift New Zealand to being a higher productivity economy where businesses generate more value and greater returns. The proposal will also create a clearer process for redundancies, with more predictable costs," it said.
The scheme was a commitment made in Budget 2021. Robertson yesterday signalled the release of the discussion document in a briefing to media after a Cabinet meeting.
Consultation closes on 26 April.
Read the summary booklet here: