Time for stopgap measures to end
OPINION: Last week, while the tourism, retail and hospitality sectors all welcomed the imminent removal of a range of Covid restrictions, some of their potential customers were taking to social media to express their lingering anxieties.
It is anyone’s guess whether domestic customers (let alone foreign tourists) will open their wallets and spend with enough confidence to rescue the firms that Covid has put in peril.
As we scrap vaccine passes, cease QR code scanning and relax the job mandates, wider issues are also in play.
In general, the New Zealand economy will soon be fending for itself once again in a world with dodgy supply chains, rising fuel costs and an unknown level of future demand from our main customer, China.
Domestically, the Government has been using tools like the wage subsidy scheme and the resurgence support payment scheme to keep people in jobs, and to help as many firms as possible to remain functioning at reasonably profitable levels.
That has been only the half of it. Since 2020, the Reserve Bank and Treasury have also deployed forms of quantitative easing that have kept the business sector ticking over reasonably well through the worst of the global pandemic.
Last week, the International Monetary Fund gave New Zealand solid marks for the way our economy has been steered through the Covid-induced hard times. Even so, the time for stopgap measures and emergency rations now seems to be drawing to a close.
Quietly, the Government, Business NZ and the Council of Trade Unions have been devising a long term ’’social insurance scheme’’ to provide a more stable and enduring system of income security in the event of job losses in future, and regardless of whether those job losses are caused by new technology, redundancies or health conditions.
Only the bare bones of what will be an ACC-administered scheme have emerged as yet.
To fund the scheme, employees and employers alike will be expected to each contribute a roughly 1.4 per cent levy on wages and salaries. This would then enable the laid-off worker to get back four weeks salary at 80 per cent of their previous income.
There may also be assistance in meeting the costs of re-training.
To qualify for help, workers would need to have made six months of levy contributions during the previous 18 months.
The full details of the scheme – and the extent to which it will replace existing welfare system supports – have yet to emerge.
Certainly, within our low wage economy, any diversion of wages into the scheme will be felt sharply, and 80 per cent of the minimum wage may not look like much of a safety net.
However, as CTU economist Craig Renney says, ‘‘New Zealand workers currently have some of the lowest levels of protection when they lose their job’’.
Better this scheme then, arguably, than what currently exists.
Even so, there promises be sharp political debates in coming months as to whether such a scheme should be a priority ahead of say, a general rise in benefit levels.
❚ Correction: In a recent Gordon Campbell column on the supermarket industry, The mystifying supermarket conclusion, the
$22 billion figure for the sector’s annual turnover was incorrectly cited as its annual profit returns.