Editorial: Watered-down job scheme still welcome

Opinion

There was a hint of apology from the Prime Minister yesterday when he outlined the Government's job support scheme. Little wonder. It fell far short of the type of initiative trumpeted in the aftermath of the Job Summit.

John Key sought to attribute this to pressure from unions to act urgently and his own desire to move quickly to help save jobs. But that was hardly going to deflect attention from the scaled-down nature of virtually every aspect of the scheme.

The Government will pay the $12.50 minimum wage for five hours to subsidise lost wages for employees who agree to reduce their hours of work to a nine-day fortnight.

Initially, the support will apply only to private-sector businesses with 100 or more staff, and be available for up to 10 employees for each threatened redundancy. A rough estimate sees the scheme being picked up by between 20,000 and 25,000 workers, at a cost of up to $20 million. That

is a far cry from officials' calculations following the summit that, based on firms employing at least 20 people, it could help 70,000 people at an annual cost of $191 million.

The dilution does not end there. The officials' estimate included $63 million to subsidise training or tuition. But Mr Key said the plan to link the scheme in that manner had proved too difficult.

Training would, therefore, not be compulsory but he hoped it would be offered. In the case of companies struggling to stay afloat, that seems unlikely. They would have to pay trainers and provide facilities for their nine-day workers.

Similarly, few employers are likely to heed the Prime Minister's call to top up the subsidy. If they did, they would, in essence, be getting nine days' work from their employees while paying them more than nine days' wages.

There are, however, some good reasons for the Government's caution. It will be keen to gauge the reaction of firms before extending the scheme to small and medium-sized companies, who employ the bulk of the country's workers.

There are several potential snags. Will, for example, some businesses take advantage of the initiative simply to lower their wage bill? Will it prop up weak companies that need to restructure to survive?

And how will it be proved that the workers involved would, otherwise, have been made redundant? Some of these concerns have been noted. Workers cannot be laid off while they are on the scheme.

This circumscribes firms' room for manoeuvre while their employees are subsidised. Additionally, a six-month maximum term is designed to provide only a short-term leg-up.

Predictably, some in the union movement have voiced disappointment. Andrew Little, of the Engineering, Printing and Manufacturing Union, said it was unlikely to be accepted by workers unless employers provided a substantial top-up.

Mr Little, like Mr Key, knows that will not happen in most cases. He must also know that most employees would far rather work a nine-day fortnight, with a small Government top-up, than find themselves redundant with little chance of finding another job.

On that basis, and because it offers employers time and flexibility to weather difficult economic conditions, the job support scheme is welcome.

While the subsidy may be perceived in some quarters as being akin to a benefit, it still falls far short of the Government picking up the full cost of the dole, as would occur after a time if the workers were simply made redundant.

Further details are yet to be mapped out, as, most importantly, is an expansion of the scheme into the more difficult area of small business. Only when that is done can its full value be assessed. But if done correctly, it can play a significant role in stopping the shedding of staff who will be needed when demand recovers.