Beneficiary number increase sparks warning of second wave of unemployment

Friday, 5 June 2020

The Council of Trade Unions says with more unemployment looming, Work and Income rules on benefits for people in relationships need to be scrapped.

The number of people taking out the benefit has lifted again, prompting warning a second wave of unemployment may be coming

In the week of May 22, just 212 new people signed up for the JobSeeker Support benefit, down from 1464 a week earlier and 8569 in the week of April 4.

But in the week of May 29, the rate of new sign-ups had increased to 540.

“There’s early signs of a rise in unemployment coming again, as the start of the second wave of unemployment looms,” said economist Brad Olsen, of Infometrics.

There are fears a second wave of unemployment will hit when wage subsidies run out.

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“The pace of job losses appeared to have been slowing over much of May, but is now showing the early signs of ramping up. This view tracks with the rise in job losses announced over the last two weeks.

“In a sense, New Zealand may have been lulled into a false sense of security in the last few weeks around the economic conditions that will emerge. The first wave of unemployment has passed, but if this uptick in benefit numbers continues, the second wave of unemployment is coming.”

But Shamubeel Eaqub said he expected three waves of unemployment, and the second should hit in June as the first tranche of the wage subsidy ran out.

But he said an increase in beneficiary numbers of 540 in the week was not yet cause for alarm, when compared against the numbers seen a couple of months ago.

“An increase of 540 is still pretty small considering… it’s going to be pretty up and down.”

The Government has also introduced a Covid-19 income relief payment for people who lose their job between March 1 and October 30 because of Covid-19. It becomes available from Monday and pays $490 a week for full-time workers, about twice the standard JobSeeker rate.