The Government has effectively extended the Covid-19 wage subsidy to those who have lost their jobs due to the pandemic.
A new Covid-19 Income Relief Payment will pay out $490 a week to those who lost full-time employment on or after March 1 for reasons related to the coronavirus. Those who lost part-time jobs will get $250 a week. The payments, which are untaxed, are roughly equal to what employees subsidised by the wage subsidy would receive after taxes.
The payments will last 12 weeks and people in need can begin receiving them on June 8, replacing the Jobseeker Support benefit which pays out between $146 and $340 per person per week. Those who lost their jobs before March 1 or for reasons not related to the virus will not be able to receive the Income Relief Payment.
“This is a very particular set of circumstances here. There is very limited availability of new jobs, although we are moving to create more of those, and we do have people whose circumstances have changed dramatically and quickly,” Finance Minister Grant Robertson said at a press conference on Monday.
Two different standards?
When asked why people who lost their job for reasons unrelated to Covid-19, who are searching for the work in the same Covid-19-affected job market as those supported by the Income Relief Payment, should receive less support, Robertson said, “It’s about the fact that there has been a sudden and unexpected change in these peoples’ lives. Yes, unemployment is difficult at all times, but this is a recognition that this came from nowhere.”
Robertson said the need for the extra payment didn’t indicate that the existing benefit system doesn’t provide enough to live on.
“It’s an acknowledgement that people who have been in work have suffered a very sharp income drop, and obviously that’s very unexpected, because of Covid-19. It is […] a temporary payment and it’s a recognition that we need to cushion the blow for people,” he said.
Peter Sykes, chief executive of Mangere East Family Services, said this explanation didn’t hold up.
“It creates a second class of beneficiaries,” he said of the Income Relief Payment.
“There’s something in there about, ‘People who are losing their jobs have got a sharp income drop and are not used to this’. Well, give me a break. That’s what unemployment is. This is a benefit for the middle class.”
Sykes said Jobseeker Support alone is not enough to live on and funding of food banks in the Budget and the creation of the new benefit for Covid-19-related job losses show the Government knows this.
New National Party leader Todd Muller also criticised the “two tiers” system.
“We hold the view that this should be ideally the same. The idea that we have two tiers is a challenge. If you hold the view that unemployment benefit is a certain level, but then for a period of time, just for a certain group of people, it should be a different payment, we think there’s not a coherence to that,” he said.
It is unclear how many people will receive the Income Relief Payment, but Robertson said that around 43,000 people had come onto Jobseeker Support since March 20.
Treasury has forecast that about $1.2 billion in payments will be made – supporting about 20,000 full-time job losses for the full 12 weeks. However, the cost to the taxpayer will be just $570 million, since many of the people on the new benefit will have come off Jobseeker Support.
Permanent unemployment insurance scheme
Robertson also announced the Government will look into the possibility of a permanent unemployment insurance scheme in New Zealand.
“These kinds of social insurance, unemployment insurance schemes around the world are very common-place, and they recognise that people have a particular set of circumstances and that it is important and necessary to be able to support them through changes in their lives,” he said.
“This whole concept of employment insurance or social insurance is something that we believe we need to work on and a separate work programme is underway.”
It is unclear exactly what this programme would consist of or how it would operate.
“We are pleased that the Minister of Finance has made it very clear that the option of social insurance is being explored more deeply. Of course we believe that some of the models that Scandinavian countries have deployed go further and deeper,” Council of Trade Unions President Richard Wagstaff said in a statement.
Wagstaff told Newsroom that he didn’t know what would work best in New Zealand, but that there are numerous options to choose from.
“We’re interested in places like Scandinavian countries and European countries where there are systems in place where the Government provides comprehensive support for workers who lose their jobs,” he said.
“It could be like ACC. It could be a system, for example, where there’s a small levy paid by workers and a levy paid by employers and Government and a scheme developed so that if you lose your job you got onto 80 percent of your salary, like you do on ACC. And that keeps you afloat until you find another job, but there’s a very also good active labour market policy, with retraining and redeployment to find another job. That’s the kind of thing that we think needs more consideration. Exactly what model we’d have here needs more work, but that’s the right direction.”
Migrants left with little
As with other welfare support introduced to fight the economic impacts of Covid-19, migrant workers are not eligible to receive the payments. While the Government has previously said support packages from Civil Defence Emergency Management (CDEM) are sufficient to help these stranded workers, Newsroom has reported that some were given little more than a few cans of beans to get through the entire four-week lockdown, with no additional financial assistance.
CDEM themselves also say that the support packages are not meant to replace longer-term welfare support from the Ministry for Social Development.
“What is important is that there is a clear understanding between what this welfare service provides and the fact that it is complementary to the emergency financial assistance that MSD is providing,” a CDEM spokesperson told Newsroom on May 12.
“It wasn’t set up to be one or the other.”
At Monday’s press conference, Minister for Social Development Carmel Sepuloni reiterated that CDEM support was sufficient for migrant workers stranded in the country without employment.
“We are not changing the underlying settings of the welfare system here,” Robertson added.
