Nearly $460m paid in wages subsidies in Northland

Wage subsidies helped small businesses like the Stihl Shop in Whangārei owned by James Nair to keep going. Photo / Michael Cunningham

The nearly $460 million in Covid wage subsidy paid to date in Northland helped save thousands of jobs during the lockdowns, business leaders say.

Figures released under the Official Information Act (OIA) by the Ministry of Social Development show $459 million in wage subsidy paid in 2020 and 2021, until January 7 this year.

The ministry paid $340m in the original wage subsidy, wage subsidy extension and resurgence wage subsidy until September 2020.

A further $119m was paid for the 2021 wage subsidies.

The payments exclude sole traders as the payments refer to jobs, not businesses, that have been supported. Money was paid to employers to help people stay employed.

Small business owner James Nair applied for and received about $6000 in wage subsidy to cover his three staff at Stihl Shop in Whangārei during a three-week lockdown in the second half of last year.

The lockdown happened about six weeks after he purchased the business and said it was a worrying time.

"I have no doubt in my mind the wage subsidy achieved its purpose, otherwise businesses would have had to lay off people left, right and centre," he said.

Although the wage subsidy covered 80 per cent of the wages, Nair topped up his staff's pay to ensure they remain employed.

Fortunately, he said, the lockdown didn't go on for longer, otherwise he would have struggled running a new business.

NorthChamber chief executive Stephen Smith said the challenges faced by businesses varied from sector to sector but generally they were looking at innovative ways of going about their work.

The construction industry has had quite a number of disruptions such as cash flow and labour shortages, although there was no shortage of work, he said.

"Lots of businesses are having difficulty accessing capital and the smaller ones are re-capitalising through existing loans. The trend is to upskill internally, whether through digitising their business processes.

"That, for many businesses, has made quite a difference as they are capturing their customers well over their service areas. They are paying more attention to business aspects rather than pushing out more products," he said.

As an example, he said a bricklayer was focusing more on the skills of running that business rather than just concentrating on how many bricks he could lay.

"Some businesses are dealing online while others are becoming more efficient in things such as payroll systems and inventory management...focusing more on the skills of developing and running a business," Smith said.

NorthChamber chief executive Stephen Smith says had it not been for the wage subsidies, more businesses would faced liquidation. Photo / Tania Whyte

On the amount of wage subsidy paid out in Northland so far, Smith said a lot of that money would be cycled through the region, which was vital during a tough business environment.

Had it not been for the wage subsidy, he said far more businesses would have gone into liquidation.

Figures released by the Ministry of Social Development show 37,242 jobs in Northland were paid Covid-19 wage subsidies last year and nearly 35 per cent or 12,927 received one of nine such payments.

In comparison, 44,892 jobs in Northland were paid wage subsidies worth $281 million in 2020.

More males (21,846) than females (15,363) were supported by wage subsidies in Northland and 60 per cent (22,359) of employees that received the wage subsidy last year worked in businesses that employed a maximum of 19 staff.

Tim Robinson, of Bernina Northland, said he has had to make changes to business operations such as switching to e-commerce as courier runs stopped during the first lockdown.

"The wage subsidy partially offset one cost and didn't pay for things like rent so businesses re-adjust their prices."