More than two in five workers now being paid with government help
Tuesday, 7 April 2020
More than two out of five employees and sole traders are now being paid with the help of wage subsidies provide by the Government.
That figure is expected to climb to three out of every five workers in the coming weeks as more claims flood into the Ministry of Social Development.
However, the New Zealand Initiative think tank said the scheme was less generous than in some other countries, and perhaps 'insufficient'.
Finance Minister Grant Robertson said the Government had paid out $6.6 billion under the scheme so far, but he expected the cost to increase to between $9b and $10b as more large employers put in claims.
The subsidy allows businesses to claim a lump sum of $7029 per full time worker and $4200 for each part-time worker, if they can show or expect a 30 per cent drop in business in any month between January and June as a result of the coronavirus pandemic.
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Robertson said the subsidy had been claimed to help pay 1,073,129 workers, made up of 914,931 employees and 158,198 sole traders.
Recipients include Harvey Norman which has claimed a $12.7m subsidy to pay 1850 staff, Trade Me which has claimed $4.1m for 591 employees, and television channel Three owner MediaWorks which has claimed a $3.6m subsidy to pay 522 staff.
The New Zealand Initiative said in a report that the scheme subsidised pay to the tune of 60 per cent of the median wage over 12 weeks.
That made it less generous than schemes in Australia and Canada, researcher David Law said.
In Canada, wage subsidies for companies of all sizes cover up to 75 per cent of a worker's wage, or 80 per cent of the average Canadian weekly wage of C$1050 (NZ$1255), the think tank said.
Its subsidies were backdated to March 15 and would apply for three months, it said.
The New Zealand Initiative's report said Australia's 'JobKeeper payment' equated to about 70 per cent of the median wage and would last for six months beginning on March 30.
'Crucially', that sum constituted about 100 per cent of the median wage in the sectors most hurt by the pandemic such as tourism, it said.
'New Zealand could be more flexible and generous in its wage subsidies, especially now that better information about how other countries are proceeding is available,' Law said.
'While the coverage and overall generosity of New Zealand's wage subsidies have improved, they still lag significantly behind its peers.'
Robertson said the Government had moved 'fast and early'.
'In a number of countries, similar schemes aren't paying out yet,' he said.
Science Minister Megan Woods said on Monday that the Government was investigating options to broaden the wage subsidy scheme to assist start-ups that were locked of the subsidies because they did not yet have sales.
That was after Auckland firm Mint Innovation and National's science spokeswoman Parmjeet Parmar drew attention to what they described as a hole in the scheme.
Mint Innovation chief executive Will Baker believed that dozens of research firms in the 'pre-revenue' phase were burning through capital as they were locked out of their facilities while being unable to claim a wage subsidy as they could not report a drop in as-yet non-existent sales.