Unemployment insurance plan attracts fire and praise in Waikato
A new government-proposed ACC-style unemployment insurance scheme has drawn fire, praise and “maybes” from businesses and unions in Waikato.
The scheme, announced this week, would be funded by a 1.39% payroll levy, matched by employers, providing laid-off workers with support for up to seven months.
Pukeatua dairy farmer Chris Lewis, national employment spokesperson for Federated Farmers, said his workers he spoke to felt “that’s another thing that comes out of my paycheck.”
Net wage cuts could affect spending across the economy. The program could also contribute to a greater labor shortage because people could take longer to find other jobs, said Lewis, who has five workers and up to three casuals.
* Companies want a cheaper unemployment insurance plan, only if they are laid off
* The government proposes an unemployment insurance scheme financed by a tax of 1.39%
It was better to keep people in “the system” of work as much as possible.
“As soon as you put people in cruise mode, it’s hard to move them. It’s not going to create the results we want…there are some unintended consequences,” Lewis said.
How New Zealand counts the unemployed
Another opponent of the scheme is Robin Ratcliffe, managing director of Waikato-headquartered heavy-trailer manufacturing giant Modern Transport Engineers, which employs around 200 people.
“I think it shows the immaturity of government,” Ratcliffe said.
He would rather see more done to stimulate the economy and job growth, and to get people into housing.
“They could start by offering a huge tax incentive to people who want to move up into the lowest income bracket.”
Noting that his company was 18 months behind on orders and would need 100 additional staff, Ratcliffe said: “[The scheme] is absolutely stupid. They put the ambulance at the foot of the cliff.
However, Pam Roa, managing director of Frankton-based food processing machinery maker Longveld, said the pros outweighed the cons.
“A lot of [small and medium enterprises] do not include severance pay in their employment contracts,” Roa said, adding that the vast majority of New Zealanders work for such companies.
She agreed that the levy would represent an additional cost for businesses.
Waikato-based NZ Dairy Workers Union national secretary Chris Flatt said the scheme was “bold and what we were looking for”.
“Everyone pays a little and you get help when needed,” said Flatt, whose union has thousands of members in Waikato and Bay of Plenty.
While many members were already covered by redundancy clauses, the program could boost their sense of security and give people time to retrain for another good job rather than just accepting something new.
Repurposing support could be particularly important as Waikato industries adapt to climate change and transition to a low-carbon economy, Flatt said.
Public Service Association (PSA) National Secretary Kerry Davies spent time growing up in the River Thames, which has been hit by the Toyota factory closure which has led to people leaving the town and have local economic impacts.
The PSA was generally supportive of the plan, noting some major recent disruptions that had hit the economy. A key question, Davies said, was “when people leave traditional jobs, how do you help them retrain and get into new jobs? “.
She said the issue was highly relevant for Waikato, which could face further declines in traditional economic activity, adding that such programs have been successful internationally.
Wintec chief executive Dave Christiansen said in a statement that it was hard to argue against the intended outcome of the program, noting that anything that reduces the impact of job losses on employees and their families “must be a good result, or at least a less bad income”.
It was recognized that there would likely be “quite a lot of labor market disruption” and there would be an increased focus on retraining, Christiansen said.
While he was sure there would be disagreement over the best policy, “pretty much anything will, for many workers, be better than what we have put in place”.
Hamilton City Council employs around 1,300 people and chief executive Lance Vervoort said the scheme had merit, was well-intentioned ‘especially in these uncertain times’ and could help in unforeseen circumstances.
“From a human perspective, it helps people avoid a crisis in their lives,” he said.
While layoffs may have been less likely on the board and employees were covered by redundancy clauses, Vervoort said he was interested in seeing more details of the plan before making up his mind and deciding whether he had to make a submission on this subject.
A statement from major employer Gallaghers, based in Hamilton, meanwhile called the program “an interesting idea”, but added “we don’t have a strong position at the moment”. The company would follow discussions on the plan “with interest”.