Govt will pay $350 a week to earthquake-hit workers

Some buildings are demolished, others are being shored up. Photo / Sarah Ivey

Workers left out of pocket by Canterbury's devastating earthquake will be compensated in a Government wage subsidy scheme that could cost up to $100 million.

Prime Minister John Key yesterday announced the scheme that will cover $350 a week of lost wages for a worker in a company of 20 employees or fewer which has been unable to operate because of the 7.1 magnitude quake. Up to 77,000 workers could fit the bill.

Ironically, the earthquake was likely to stimulate the economy in the long term, Mr Key said.

"Because there is such a massive rebuilding programme that needs to take place.

"Now we don't know how big that programme is - some of the estimates are around $2 billion, but it could be more or less."

Opposition parties were reluctant to criticise the wage subsidy scheme yesterday when seeking to help support Canterbury through its crisis.

"I think it's a start," said Labour leader Phil Goff.

"We need to look at it, and see it in operation, and see whether it's adequate to meet the needs of people.

"Obviously what we need to ensure is that anyone who has suffered a loss of income, because of the effects of the earthquake, can be sustained until they can secure new employment, or their employer is able to take them back on."

Progressive Party leader and Christchurch mayoral candidate Jim Anderton said he supported any emergency action that helped people pay their bills.

Mr Key denied the scheme was the result of pressure from the business community.

"The way I would describe it is that we certainly recognise the real and genuine hardship that people may go through through no fault of their own.

"We want to help people out, and we want to make sure that people take some security. They are under enough stress at the moment dealing with the aftershocks that are occurring on a regular basis.

"The last thing they need to be worrying about is whether they can afford to pay their food bills."

Mr Key promised the scheme would be flexible and "very unbureaucratic".

"In broad terms, the way that the scheme works is that it applies to companies that have 20 employees or less. They will be made a bulk payment of $350 a week per employee.

"So in simple terms it will operate for about four weeks, and at the end of four weeks we will go and review the scheme. If it needs to run longer, we will continue to do that.

"We think, in broad terms, there are about 2000 to 5000 companies that fit within that category, and roughly it costs around about $14 million per 10,000 employees, and we think there's 77,000 employees who could fit within that category.

"The payment will start from Thursday and will be backdated to the day of the earthquake, Saturday. The aim here is to keep employees and employers locked in together."

Using the example of a waitress earning $500 a week, under the scheme she would be paid $350 from the Government, and it was likely her company would be able pay her the remaining $150.

"If a company has more than 20 employees, then we believe they will still be eligible for payments made under the Civil Defence scheme, although that will be on a case-by-case basis."

Social Development Minister Paula Bennett was with Mr Key in Christchurch to announce the scheme.

"We are determined to help them get through the worst of it," she said.

HOW IT WORKS
* $350 a week gross wage subsidy.
* Advance lump sum paid to employer.
* Employer can 'top up' subsidy.
* Backdated to date of earthquake.
* Firms holding insurance cover for loss of earnings will be expected to use this before accessing the wage subsidy.