SUBSIDY TO END

The Covid-19 wage subsidy scheme that has supported nearly 2 million jobs will end in September, Prime Minister Jacinda Ardern says.

The $11.9 billion scheme has been in place since March, and has helped insulate 1.7 million workers and their employers from some of the economic effects of the coronavirus pandemic.

On Sunday, Ardern confirmed that the scheme, already extended to September, will not continue.

‘‘A wage subsidy is not something that can continue on in the never-never,’’ she said.

‘‘It would delay the critical work that businesses may need to do to pivot in the new Covid environment. And businesses themselves have said that they think that continuing for too long could run the risk of being harmful for the long-term resilience of some of those businesses.’’

The scheme pays businesses

$585.50 per week for each full-time employee, if the business has suffered a loss of revenue of 40 per cent within a month because of

Covid-19. Before the scheme was extended in June, businesses had to prove a loss of 30 per cent of revenue to be eligible for the scheme.

The scheme will end on September 1, three weeks out from the general election. That could mean job losses as the subsidy ends, with businesses deciding they cannot resume paying full wages.

Ardern said workers would have to move onto the Government’s ‘‘income relief’’ payments, and there was other support for businesses that were struggling.

‘‘The $400 million tourism fund enables us to provide that [other support],’’ she said.

‘‘We also have the Covid recovery income support payment. So anyone who does find themselves without work can move onto that payment, which is consistent with what they would have received if they were receiving the minimum of the wage subsidy.’’

The income relief scheme, which is expected to cost the Government $1.2b, pays workers who have been turfed out of a job due to

Covid-19 income support of $490 each week. The 12-week payments will be available until November.

If a person receiving the income relief payments is still unemployed after 12 weeks, they are moved onto the Jobseeker Support benefit, which is $250 a week.

Data released by the Ministry of Social Development last week showed there were more than

200,000 people receiving unemployment payments, and 56,000 of these had asked for support since March 20 – days before New Zealand entered lockdown.