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Govt modifies wage subsidy scheme to protect Kiwis’ jobs

These changes will soften the impact of COVID-19 on workers, families, and businesses, and position them to exit the lockdown and look to recovery, Finance Minister Grant Robertson says.

Devdiscourse News Desk | Wellington | Updated: 27-03-2020 08:52 IST | Created: 27-03-2020 08:52 IST
Govt modifies wage subsidy scheme to protect Kiwis’ jobs
“These modifications are about keeping New Zealanders currently at home in lockdown connected to the job they were in on Wednesday before it started,” Grant Robertson said. Image Credit: Wikimedia

The Government has made modifications to the wage subsidy scheme to ensure people don't lose their jobs during the national lockdown.

These changes will soften the impact of COVID-19 on workers, families, and businesses, and position them to exit the lockdown and look to recovery, Finance Minister Grant Robertson says.

The modifications focus on keeping businesses and workers connected during this unprecedented time. They apply from 4 pm today, and include:

Businesses accessing the scheme must still undertake best endeavors to pay employees 80% of their pre-COVID income. Where that is not possible – in particular where a business has no activity whatsoever due to the shutdown and workers are not working any hours – they must pass on at least the whole value of the wage subsidy to each affected worker.

Businesses must undertake to keep employees in employment for the period of the subsidy.

We are folding the previous sick leave scheme into this scheme to prevent double-dipping. The original sick leave scheme was designed when few people were in self-isolation, and it is no longer fit for purpose. We are working on arrangements for those in essential work who require sick leave due to COVID-19.

The Treasury now estimates the financial cost of the scheme will be between $8 billion and $12 billion depending on uptake by businesses.

"These modifications are about keeping New Zealanders currently at home in lockdown connected to the job they were in on Wednesday before it started," Grant Robertson said.

"This ensures businesses not able to operate do not need to lay off staff. Even if this requires businesses to operate with no activity, the subsidy allows them to keep their workers on the books, particularly during Alert Level 4."

The wage subsidy is a Government payment to help employers pay wages. It does not change any other employment law obligations, meaning employees must be paid appropriately under their employment agreements for the hours they do if they work during the lockdown.

"We are running this scheme on a high-trust model in order to get money out the door and support the workers, families, and businesses who are affected by COVID-19. We are also preparing an appropriate audit process that will act as a backstop for this high-trust model," Grant Robertson said.

The wage subsidy is $585.80 a week for full-time workers (who worked 20 or more hours per week before COVID-19) and $350 a week for part-time workers (fewer than 20 hours). It will continue to be paid out in a lump sum covering the 12 weeks, meaning a $7,029.60 payment per full-time worker.

"Demand for the scheme is high, with $2.7 billion already paid out for 428,768 workers. I want to place on record my appreciation for the Minister of Social Development, Hon. Carmel Sepuloni, MSD CEO Debbie Power and all their team for the incredible work that has made this happen.

"People are working hard to respond and process applications as fast as they can under challenging conditions. Please be patient when applying, and please be kind to each other," Grant Robertson said.

Expansion of the wage subsidy scheme comes on top of a range of support measures for Kiwis during this global pandemic, including:

The $500 million increase to public health funding for the immediate response.

A six-month deferred mortgage scheme for home-owners affected by the virus, so people don't lose their homes due to COVID-19.

The $6.25 billion Business Finance Guarantee, and business tax measures to support cashflow and help businesses continue to operate.

A doubling of the Winter Energy Payment so older New Zealanders can stay warm during winter.

Main benefit increases, and

Rent freezes and a ban on terminations of tenancies/evictions other than in exceptional circumstances.

(With Inputs from New Zealand Government Press Release)

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