Labour would expand existing subsidy for those at risk of long-term unemployment

Labour launches campaign with $311m commitment to expand subsidy paid to businesses that employ people at risk of long-term unemployment

8th Aug 20, 1:53pm by Jenée Tibshraeny

Image sourced from Labour Party.

The Labour Party is launching its election campaign with a policy to expand an existing subsidy available to employers who hire people "at risk of long-term unemployment".

It’s committing to making a one-off multi-year investment of $311 million in the “Flexi-wage” subsidy, introduced by the previous National-led government. This is different to the wage subsidy offered because of Covid-19.

Under the scheme, employers who want to hire staff at risk of long-term unemployment can negotiate a rate and duration of the subsidy with the Ministry of Social Development.

The value of the subsidy reflects the investment necessary to increase the employee’s skills so that they can retain the job.

Unemployed people who want to come off a benefit and start a business are also eligible to receive the subsidy.

In 2019, 6,000 employers received a Flexi-wage subsidy at an average of $3,500 per person hired.

Labour is aiming to increase this to $7,500 by making the scheme's criteria more flexible. It isn't clear exactly how this would be done.

Under a new criteria (and with unemployment expected to increase) Labour expects the subsidy would be available to 40,000 people.

It would also ring-fence $30 million for recipients who want to start a business.

The maximum subsidy per person would remain $22,000.

The Party said the scheme hadn’t been receiving the funding it needed. In 2016/17 funding fell by $10 million to $29 million.

Funding for the scheme would come from un-used Covid-19 wage subsidy funds.

Labour’s policy is similar to National’s “JobStart” policy.

Under JobStart, National has committed to paying businesses $10,000 for every new fulltime, permanent employee they hire.

The payment would be capped at $100,000, or 10 new employees, per business.

A key difference is that JobStart would be available temporarily between November 1, 2020 and March 31, 2022.

Whereas Labour’s proposal is to better fund an existing permanent scheme.

The Flexi-wage subsidy is also more targeted than JobStart, which is available to employers regardless of who they hire.

National is pledging to help unemployed people start their own businesses by enabling them withdraw $20,000 from their KiwiSaver accounts.

Here is more on the types of Flexi-wage subsidies available:

Flexi-wage (Basic/Plus): Flexi-wage is a hiring subsidy paid to employers to hire disadvantaged job seekers. The subsidy can be for up to one year and be no more than $22,000 in that year. The level and duration of the subsidy depends on the characteristics of the person and the requirements of the position. The person must stay in employment for at least the duration of the subsidy.

Flexi-wage Self Employment: Flexi-wage Self Employment provides financial assistance for people on income support to start their own business. This includes grants to cover capital costs or the initial establishment of the business until cash flows are large enough to support the person. The Flexi-wage Self Employment subsidy can be given on its own, or in conjunction with the Self-Employment Start-up payment.

Flexi-wage in Training: Flexi-wage Plus is an additional training subsidy with the option of using some funding for other assistance that employers need, such as training, mentoring or in-work support. This can be used to subsidise training required by people on a Flexi-Wage basic subsidy.

Flexi-wage Project in the Community: Flexi-wage Project in the Community is a subsidised voluntary community-based work experience programme. The programme is designed to allow people to experience project-based work where they can develop work habits and general on-the-job skills through community or environmental projects that would not otherwise be undertaken. Flexi-Wage Project in the Community can cover support and mentoring, but not training. A wage subsidy can be paid per person per week up to the annual maximum of the current adult minimum wage (at 30 hours per week).

For more on the Flexi-wage subsidy, see this fact sheet and this one.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

72 Comments

by Officebound | 8th Aug 20, 2:00pm 1596852014

I always see it as a sign of poor policy when it has a limit, such as the 40,000 here.

If it was good spend, that overall contributed to long term outcomes with ROI over 1, wouldn't you let it run?

by Foxglove. | 8th Aug 20, 2:03pm 1596852230

Hobson’s choice. No democratically elected government, a civilised nation in other words, would allow its people to be broken, falling out on the street, so to speak. Both our major parties acknowledge that, hence announcements of their policies accordingly.

by bw | 8th Aug 20, 2:09pm 1596852560

And by 'its people' I'd suggest that it be quarantined to NZ citizens and those who are here right now.
Encouraging more workers into the country to take advantage of these schemes, when we are flat out re-employing and supporting those we already here, will be enough of a financial challenge for us.

by J.C. | 8th Aug 20, 2:29pm 1596853783

Completely agree. However, you understand what that potentially means. The NZ economy has been surviving on immigration. How would it rub if immigrants were allowed to come here but not able to participate in the workplace? This couldn't work and it would be labelled as discriminatory.

by cmat | 9th Aug 20, 2:50pm 1596941451

And "allow its people to be broken, falling out on the street" you know that means never let anyone be forced into a position where they would have to sell their home.

by Dgm | 8th Aug 20, 3:05pm 1596855918

It pertains to those currently on some form of unemployment benefits.. so that dictates who's eligible

by Wazim | 9th Aug 20, 4:09pm 1596946153

Oh my God! did you just link civilisation to democracy? Really??? Mate, you need to leave UnZud as soon as possible and see some of the world. It's a nice place, you might like it (hint: it's not ALL white, democratic and 'civilised')

by Hook | 9th Aug 20, 6:11pm 1596953483

Yeah maybe, but it's overpopulated, filthy and mostly a war zone of one form or another. If it's so nice how come you're here?

by Tillers | 8th Aug 20, 2:18pm 1596853132

I think it’s good because it is targeted at people who are likely to be unemployed long term vs the current general wage subsidy. What does this mean for the 400k odd jobs tht are still receiving the wage subsidy?

by Boatman | 9th Aug 20, 12:23pm 1596932607

@tillers we should rather wait to see what actually happens and respond accordingly . Its crazy to make such a blanket statement as Labour has done offering help to "anyone at risk " of job losses

We are all at risk right now

by MLSmith1 | 8th Aug 20, 2:35pm 1596854138

Here we go...the furtherance of socialist government with tenticles spread far and wide.

by Foreign buyer | 8th Aug 20, 3:12pm 1596856331

Except that socialism is supposed to help the poor, not the rich landlords, who will indirectly be the main beneficiary of this charity.

by Yvil | 8th Aug 20, 3:27pm 1596857244

How does this scheme help the landlords?

by J.C. | 8th Aug 20, 3:33pm 1596857628

How does this scheme help the landlords?

Landlords are a secondary beneficiary. It enables people to be able to contribute to rent payments.

by Albert2020 | 8th Aug 20, 5:12pm 1596863571

That’s a bit of a stretch isn’t it? By that logic Supermarkets will be a secondary beneficiary allowing them to charge currently ridiculous prices for their goods.

by J.C. | 8th Aug 20, 9:33pm 1596879218

No it's not a stretch. Housing costs and FMCG products comprise much of the budget of h'holds and individuals. So yes, supermarkets are a beneficiary. The ability to charge high prices is irrelevant.

by Logicthinker | 8th Aug 20, 11:03pm 1596884618

Watch out for an extra Tax on Alchol in 2021.

by dcnbwz | 9th Aug 20, 5:41am 1596908481

Alcohol does have a hugely damaging effect on society - a tax might not be a bad thing, but there needs to be preventive services in place to reduce consumption and harm, rather than at the bottom of the cliff, which seems to be the usual approach.

by cmat | 9th Aug 20, 2:51pm 1596941504

No stretch at all.

That's exactly what it is.

by Audaxes | 8th Aug 20, 3:56pm 1596859005

Global govt debt on course to fresh ATH. Debt/GDP ratio has reached almost 90% at the end of Q1 this year. Q2 numbers, when available, are highly likely to show, that global sovereign debt/GDP has reached a new high, surpassing the previous WWII peak of 104%, BoA says. Link

by dcnbwz | 9th Aug 20, 5:39am 1596908371

Could you care to explain what you mean by socialist government? The context seems to be defined by the use of the word tentacles, implying that you think it is bad, maybe you oppose "it"- a quick definition from google says this - "Socialism is an economic and political system. It is an economic theory of social organization. It believes that the means of making, moving, and trading wealth should be owned or controlled by the workers. ... Socialists believe that everything in society is made by the cooperative efforts of the people and citizens."

Is that REALLY what you believe is happening here? No party in New Zealand is even remotely close to this definition, so come on, some effort to engage would be better I think. We have problems, as does the rest of the world, that need immediately addressing through policy that helps the majority of new zealanders.

It looks to me like this is another gross exaggeration to negate any kind of policy that doesn't conform to the status quo of trickle up neoliberalism.

by Brutus Iscariot | 8th Aug 20, 3:03pm 1596855828

"Flexi-wage (Basic/Plus): Flexi-wage is a hiring subsidy paid to employers to hire disadvantaged job seekers. The subsidy can be for up to one year and be no more than $22,000 in that year. The level and duration of the subsidy depends on the characteristics of the person and the requirements of the position. The person must stay in employment for at least the duration of the subsidy."

"Characteristics of the person"? What might those be? Are we about to get a nationwide "affirmative action" programme via racially targeted wage programmes? Certainly would seem a possibility given the angle taken in the announcement.

by Hook | 8th Aug 20, 5:12pm 1596863537

This is a bribe to unsuspecting and naive new SME employers. Once you've hired the poor downtrodden disadvantaged jobseeker (whatever that is) you're stuck with them, regardless of how inept or unsuitable they turn out to be

by Foxglove. | 8th Aug 20, 5:25pm 1596864300

The three month probation period National introduced gave some protection against those circumstances and at the same time gave employers some confidence to employ when they may not have done so otherwise. The Labour government tripped over itself in almost obscene haste to remove the ability. Still WP stepped in and it was retained for employers of less than 25 in number? Some protection still there then?

by Solidname | 8th Aug 20, 5:35pm 1596864959

it still exists for companies with under 19 employees (so pretty much for SMEs) https://www.employment.govt.nz/starting-employment/trial-and-probationa…

by Hook | 8th Aug 20, 5:54pm 1596866043

Yeah the 90 day trial is still current. However to gain the full subsidy (22K) there needs to be employment for the full term. I personally have experience of employees who were exemplary through the 90 day trial period and subsequently turned out to be nothing but an ongoing liability.. theft, drug use, poor time keeping, absenteeism etc.I'm glad I sold the business and now have a much less fraught lifestyle. Employment of low skilled and "disadvantaged" employees is not to be taken lightly by an employer.. no matter how altruistic they may be.

by waymad | 8th Aug 20, 6:52pm 1596869571

Indeed, and especially in a smallish firm, where that one new hire may be 20% of the workforce, a compulsory one-year term is gonna be a showstopper. Small teams need cohesion and nicely balanced skills, work habits and productivity. Hiring a 'disadvantaged' person into such a team is simply a massive risk to the entire enterprise....

by Hook | 8th Aug 20, 7:18pm 1596871107

I guess you could always hire a Security Guard for your enterprise.. assuming he stays awake

by dcnbwz | 9th Aug 20, 5:43am 1596908635

Yes, that's right, it's a deliberate trap for SMEs so that we can all sit back and laugh as they get caught with those hapless jobseekers. You know, like those pilots. Or the hundreds of other skilled industries who have struck trouble in these recent times.

Because it would be really bad to give people a hand up right?

And yes I'm being sarcastic, it's the only way I can express rolled eyes on here.

by Hook | 9th Aug 20, 9:12am 1596921137

Haha.. nice try at a sweeping generalism. The article spoke of disadvantaged or potentially long term unemployed. I very much doubt pilots or other skilled workers fall in to that definition. Recent redundancies have often been from industries in the tourism and hospitality sectors which it is well accepted are not a hotbed of transferable skills. These people DO however have an existing work ethic so will be readily employable, the disadvantaged and long term unemployed not so much.

by dcnbwz | 9th Aug 20, 9:26am 1596921990

The disadvantaged and long term unemployed are exactly that - disadvantaged, it's definitely not a level playing field. But not everyone is cast in the same mould. So equally it's a generalisation to assume that there is no work ethic outside of those you've mentioned.

There will be other needs and assistance required to help people back on their feet, it is after all, a complex problem with a complex set of issues. And there will be those that may well be unreachable.

You see what I'm getting at here right? Complexity requires a nuanced solution that addresses the root causes.

by Hook | 9th Aug 20, 9:37am 1596922626

Yes I certainly agree we are facing a complex situation which as you say calls for nuanced solutions. My point was originally that there is a core of unemployed that wish to remain unemployed. Decades of tinkering and cajoling have failed to shift those numbers much. With the borders closed to "normal" immigration we hopefully will see industries hiring more locals. Maybe spending 311mil on meaningful training would help, coupled with "job matching" where people are trained to fill positions offered. IMO there shouldn't be a labour shortage and a burgeoning unemployment tally able to exist at the same time and place

by Foreign buyer | 8th Aug 20, 3:10pm 1596856204

So in other words, they want to help keep the struggling renters paying their enormous rents to the overstretched rentiers so that the house prices do not crash and the over exposed banks do not fail. The greedy risk taking rentiers will be propped up at all costs at the expense of the people who can not afford the insanely high house prices. Nothing new to see here.

by J.C. | 8th Aug 20, 3:30pm 1596857449

It's a lot bigger than simply landlords. NZ as a whole doubled down on the property bubble a long time ago. Furthermore, people need to start to get it into their heads that the domestic consumer economy is the single most important sector of the economy. The less disposable income to spend into that sector, the greater the negative feedback loop into the real economy, which further rips into the housing market.

You cannot blame the govt for trying to do something. The alternative is to let people fend for themselves a la Mad Max. The meth market would be more bouyant than it already is.

by Foxglove. | 8th Aug 20, 4:25pm 1596860738

Bravo!

by Hook | 8th Aug 20, 5:08pm 1596863312

If you can afford to buy meth then you ain't in financial trouble. People on limited incomes need to start prioritising their outgoings.. meth and a Sky subscription shouldn't even be part of the equation

by dcnbwz | 9th Aug 20, 7:51am 1596916294

A comment of a certain time and place that doesn't seem to move on.

by gypsymanz | 9th Aug 20, 8:05am 1596917130

A lot of meth purchases are financed by the insurance industry via burglary.

by sunchap | 8th Aug 20, 6:18pm 1596867489

IMHO the decisions to lock down and consequent wage subsidy schemes are the most catastrophically stupid madd by a Kiwi government since invading the Waikato.

Multiple studies including a recent one in the Lancet and plain common sense show lockdowns do not work. Where was the holocaust of Covidian death in Japan, Sweden, Belarus etc etc.

by Hook | 8th Aug 20, 5:05pm 1596863104

Man you truly need to swap the record.. constant carping about "evil landlords" is getting pretty tiresome. If people can't afford the admittedly ridiculous prices in Auckland then leave Auckland. If they want to stay there then pay exorbitant rent/house prices but stop bleating how hard done by they are.

by powerdownkiwi | 8th Aug 20, 5:59pm 1596866344

Evil they may not be, parasitic they are, 100%.

by Hook | 8th Aug 20, 6:07pm 1596866851

What an unmitigated pile of rot. If you actually had something constructive to post you'd be more conducive to intelligent discourse, unfortunately nothing I've read from you has been remotely salient

by brisket | 9th Aug 20, 9:14am 1596921281

Capitalism is essentially parasitic... the assumption that it should be possible to make a living from ‘an investment’ if you have a large enough sum of capital... a staggering sense of entitlement behind it really. Problem is that we’ve baked that assumption in to so many things that it can’t be unwound, hence the spectacle of ‘socialist’ governments intervening to defend the value of private investments...

by wee willy winkie | 8th Aug 20, 4:30pm 1596861019

If the payment is available for 40,000 people to a maximum of $22,000 per person, doesn't that add up to $880 million? Is it going to be first come, first served?"......... by making the scheme's criteria more flexible. It isn't clear exactly how this would be done." Sounds like Kiwi build over again.

by Hook | 8th Aug 20, 4:59pm 1596862759

God help us all. Another freakn subsidy. Borrow NZs way into complete subservience to offshore credit suppliers. Labour is probably aware that the 2023 election won't go their way so loading up debt now to shackle next 2 decades of taxpayers with unsustainable debt repayments so they can say "we were better managers" through our current issues but conveniently ignoring the downstream effects they created.

by Kezza R | 9th Aug 20, 3:23pm 1596943420

Wait untill Labour wins this election and the money tap is turned to on fully.

by Henry_Tull | 8th Aug 20, 5:55pm 1596866157

After 3 years these guys have no idea.
Rather they just take other peoples policy.
- take out the carbon act/ climate change as all being greens Shaw was writing PMs speeches for her.

The PM just doesn't have the cattle, nor the wit to devise policy (committee this, committee that).

by Hook | 8th Aug 20, 5:25pm 1596864316

True that Henry, although it did keep a bunch of shiny arsed paper shufflers in business. Something successive Labour govts have refined to an artform. Under the Clark govt bureaucracy expanded exponentially with no gain to NZ Inc. Seems JA & Co have just continued to sing off the same song sheet with the same results.. dithering, obfuscation and lack of delivery. Glad I have my tax affairs structured so I'm not financing them any more than is absolutely unavoidable

by powerdownkiwi | 8th Aug 20, 6:00pm 1596866451

I can translate that last sentence for you:

"I think of myself first".

There, fixed.

by Hook | 8th Aug 20, 6:30pm 1596868219

Quite telling that you feel the need to "translate" for others. Given I started my working life as 17 yr old orphan and am now financially secure with early retirement in my grasp, having lived and worked in some very deprived rural areas I feel I have every right to my observations. The difference between me and most of my classmates was simple.. an education (which we all had) and the drive to self improve (which many lacked). Nothing remotely attributable to any govt policies over the last 40 yrs but totally attributable to my solo mother's ethics. Something sadly lacking in today's parents of many of our youth.

by oldbloke1 | 8th Aug 20, 6:37pm 1596868673

Sir John Key! What are you doing here?

by Hook | 8th Aug 20, 7:14pm 1596870846

Lurking.. dahh dah, dahh dah... Que "Jaws" music

by al123 | 8th Aug 20, 8:03pm 1596873837

Hook, these two things can be true simultaneously: that you had the drive to self improve and worked hard; and that some of your financial success is attributable to government policy. And if you own property and have done for some time, then part of your financial success is attributable to 40 years of government policy which has inflated asset prices to the benefit of older asset holders and to the detriment of younger wage and salary earners. Acknowledging this does not take away from your drive, ambition, hard work etc. But people not being prepared to acknowledge this contributed (justifiably) to the resentment a lot of people feel towards the beneficiaries of those government policies.

by iconoclast | 8th Aug 20, 5:26pm 1596864406

Why NZ Borders will be locked forever

Sweden has opted for herd immunity which means their entire population will be carrying the Covid-19 virus plus an anti-body. Should they travel overseas from Sweden they will be carrying both the virus plus the anti-body. Will the virus be completely inert or will virus still shed?. Probably

by oldbloke1 | 8th Aug 20, 6:18pm 1596867495

Rubbish. Go learn some science.

by Logicthinker | 8th Aug 20, 10:26pm 1596882365

Oldbloke 1 - Great Statement - You must be a true Democrat. One of Biden's Lost Boys.

by Wazim | 9th Aug 20, 4:20pm 1596946805

He's definitely a carrier... we're just not sure of what, senility? Marxism? Jacindamania? Mad cow? (maybe a bit of a smorgasbord)

by dcnbwz | 10th Aug 20, 7:26am 1597001193

Rabid right?

by Lanthanide | 8th Aug 20, 6:40pm 1596868807

herd immunity which means their entire population will be carrying the Covid-19 virus plus an anti-body.

That's not what herd immunity is. They just have antibodies for it. Not the live virus and they aren't infectious once they've recovered from the illness.

by iconoclast | 9th Aug 20, 11:35am 1596929714

So how do you explain the experience in Australia when the herd-immune new arrivals carrying measles and other diseases, decimated the indigenous population who didn't have that immunity

by oldbloke1 | 9th Aug 20, 2:51pm 1596941461

Herd immunity doesn't mean nobody has the disease - it means that there are enough immune people in a group, to prevent epidemic spread. Immunity only arises from infection (or from immunisation). In the case of Australia, there would have been some people infectious with measles on a voyage, and enough others who were not immune, to carry measles through the 3 months or so of the voyage there. Those with an active measles infection would have spread it to native Australians on their arrival.

by rastus1 | 8th Aug 20, 10:09pm 1596881378

Another nail in the coffin for free markets, freedom and individual rights and responsibilities. It’s like having a parent that won’t let you grow up.

by guwop | 8th Aug 20, 11:14pm 1596885290

It's called the Nanny State for a reason.

by dcnbwz | 9th Aug 20, 7:04am 1596913484

Guess what? The markets are still free. Your individual rights are still there. Responsibilities...now there's an interesting one. Under neoliberalism social responsibility is ignored in both professional and private matters. Obligation is another.

For example - Rio Tinto have an obligation NOT to pollute new zealand with tailings from their smelter that they have profited from with taxpayer funded electricity. They have a RESPONSIBILITY not to do that, only under the current framework that is not enforceable.

As for parent/nanny state - more tired old right wing tropes. We all have responsibility as a nation and society, as equally we have rights too.

by GV 27 | 9th Aug 20, 9:45am 1596923143

I guess like the government has a 'responsibility' to campaign on actual realistic policy in 2017 but didn't and is now trying to frame a muted campaign as a 'responsible' one in the post-Covid19 world?

by Wazim | 9th Aug 20, 4:22pm 1596946921

Try again! the markets are most definitely NOT free and your rights are being eroded every year. Just because you are not paying attention doesn't mean it ain't happening.

by dcnbwz | 10th Aug 20, 7:25am 1597001154

Which markets wazim? Which rights?

by Boatman | 9th Aug 20, 12:21pm 1596932460

Oh for goodness sake , there is not a single Kiwi who is not "at risk " of losing his or her job , not a single one of us , from a waiter in a restaurant on the minimum wage to the journalist working on this site , to teachers , bankers , pilots , whatever you do , even those of us who think we are bullet -proof in the professions .

We are all at significant risk of things going wrong that we could not have seen coming

If Covid -19 has taught me nothing else , it is that we are a very vulnerable human race on a lonely planet, and we should expect the unexpected to arrive at any time and turn our world upside down

This so called "policy " is nothing of the sort , its simply emotional manipulation of our concerned and vulnerable population .

And someone should call it for what it is

by Rosenstein | 9th Aug 20, 2:49pm 1596941387

vulnerable population, or population that is used to handouts, and will vote for one, because working is too hard.

by dcnbwz | 9th Aug 20, 3:11pm 1596942703

It's a great fantasy world you live in

by Boatman | 9th Aug 20, 9:30pm 1596965423

Right now I feel like an American voter must have felt in 2016 .

Crooked Clinton or Donald -the - Rogue .

The choices for me are terrible , I may just boycott the election in disgust or protest

Winston is dishonest and cannot be trusted
National is all over the place
Labour have no depth , she is a dishonest, smiley leader who wants everyone to be " kind "
The Greens are such a nightmare I need to take my Restoril (R) to help me sleep at the thought of them forming the next Government .

by oldbloke1 | 10th Aug 20, 8:14am 1597004055

Drama queen!