Jobs focus wins praise, but unions say more needed
Wage subsidy boost will help employers pay more workers for longer
Business groups have welcomed the Government’s focus on supporting jobs, but union representatives say it could have gone further.
The Budget includes $3.2 billion for an eight-week extension of the wage subsidy scheme, as well as $1.6b for trades and training.
Kirk Hope, chief executive of Business New Zealand, said extending the wage scheme was appropriate.
“Supporting the wages of employees has been a successful strategy in the Government’s Covid response so far, and it is good to see this strategy continue.”
The Government’s existing 12-week wage subsidy ends next month, having already paid out $10.7b to help keep 1.7 million Kiwis in jobs through the lockdown and subsequent restrictions.
From June 10, businesses that have, or expect to, suffer a 50 per cent hit to revenue will be eligible for an extension to the subsidy, which will be open to applications for a 12-week period and paid as an eight-week lump sum at the same rates as the existing scheme.
Hope said expanding the subsidy to include research and development start-ups and pre-revenue R&D startups that are recognised by Callaghan Innovation was a smart way of boosting new and innovative firms that would aid New Zealand’s medium-term growth.
Leeann Watson, chief executive of the Canterbury Chamber of Commerce, said businesses would welcome the extension of the wage subsidy.
“It will be quite some time for businesses to return to normal and we need to recognise that. Just because businesses can open does not mean they will be at full capacity for quite some time to come, based on demand, social distancing and general behaviours of consumers.”
Watson said only time would tell if the eight-week extension would be enough to keep them going.
“What I took some comfort from was that acknowledgement that businesses do need support.”
She said the 50 per cent revenue drop criteria was “about right”.
Bruce Bernacchi, KPMG head of financial services, said the announcements gave a very strong signal to business that the Government was there to protect jobs and provide additional support.
He said the wage subsidy extension would most help tourism, bricks and mortar retail and hospitality businesses although tourism could need a further extension.
Of the $50b spending package $20b remained unallocated.
Bernacchi said the worst of the economic shock was still to come and it was prudent for the Government to hold the $20b in reserve for now given the uncertainty and the potential for a second wave of the virus. But Andrea Black, an economist at the Council of Trade Unions, said although the Government was heading down the right path, it needed to go further, faster.
“While the targeted wage subsidy — particularly to highgrowth firms — free trades training, increased health spending, the investment in environment jobs as well as increased focus on research and development is great, it would have been good to have . . . greater emphasis on a general pathway to highervalue, higher-wage employment for the economy as a whole.”
She said Covid-19 had exposed the poor support for essential workers.
Black said they needed to earn at least the living wage and have a fair pay agreement.
“This Budget has delivered a massive boost and is good for working people, but given the scale of the challenge . . . it could have gone even further.”
The $1.6b for trade training and apprenticeships will include $412m to support employers to retain and keep training their apprentices, $334m for additional tertiary education enrolments and $320m for targeted investment support for free trades training in critical industries.
Hope said the apprenticeship and trades training support would help firms get the skills they need.
“The suite of trades training initiatives supports a range of different models to help people get the skills they need.
“The Budget package provides a real opportunity for companies and education providers to work together to find ways to turbocharge the skills development New Zealand needs.”
Watson was also pleased to see the focus on preparing for the future of work.
“Our future workforce relies heavily on those coming through and those in existing work to have the key skills and abilities to ensure a productive workforce.”
Just because businesses can open, does not mean they will be at full capacity for quite some time to come. Leeann Watson, Canterbury Chamber of Commerce