Businesses taking up wage subsidy

Otago Chamber of Commerce chief executive Dougal McGowan. Photo: ODT files
Dougal McGowan.
Businesses affected by the Covid-19 outbreak are largely interested in two questions: whether they are an essential service and how to access the wage subsidy scheme, Otago Chamber of Commerce chief executive Dougal McGowan says.

‘‘There’s been a huge number of businesses that have processed their wage and salary subsidies, which are a great start to help them with those costs,’’ Mr McGowan said yesterday.

Finance Minister Grant Robertson said there had been 117,273 applications for wage subsidies and of them 41,505 had been approved. The amount paid out to businesses in wage support was $687 million as of yesterday afternoon.

The Government had also removed a $150,000 cap on businesses seeking wage subsidies.

‘‘That’s a huge, huge relief, particularly for those medium to large businesses,’’ Mr McGowan said.

‘‘It’s a big help for them.

‘‘It’s throwing a wee bit of a lifeline out to some of those businesses to keep the doors open.’’

Mr McGowan said it was crucial businesses did not make a premature decision to close or lay off staff when support might already be available, or become available soon.

‘‘If you’re unsure, get in touch.

‘‘Try to hold on for as long as you can because you never know when the next opportunity will come out of that.

‘‘We don’t know what’s going to be announced today or tomorrow. Try to get into a position with your banks or with your accountants ... talk to your staff, are they willing to move on some things?

‘‘There’s lots of different ways where you can try to keep the doors open and keep your good-quality staff as part of your business.’’

He admitted hospitality businesses were in a particularly difficult position: ‘‘Their doors are shut; that’s a killer for some of them.’’

Mr McGowan said he was starting to hear of businesses shutting down but only temporarily.

Human Connections Group director Emily Richards ran a recruitment business in Sydney during the Global Financial Crisis. Yesterday, Ms Richards said the ‘‘same rule book’’ on what businesses should be doing applied now. It was just a different scenario because of the health aspect.

As a small business, Human Connections Group was affected by the ramifications of the Covid-19 outbreak; the recruitment side of it was ‘‘pretty much dead for the time being’’ but the human resources team was busy fielding calls and giving advice.

Ms Richards said employers needed to get their applications in urgently for wage subsidies and try not to make any rash decisions until they had ‘‘crunched the numbers’’.

In her own business, they were up to ‘‘scenario 10’’ in their financial modelling and she suggested other businesses do the same. As directors, they had cut their salaries and were putting staff first.

They were also speaking to all their debtors ‘‘very delicately’’ and paying all their suppliers everything they owed. So far, the business community across Otago was paying them and keeping the cash moving between businesses was needed.

‘‘We just hope that goodwill continues as things get harder,’’ she said.

Businesses without an internal human resources team had to get advice, she said.

Otago Southland Employers Association chief executive Virginia Nicholls said the organisation had been ‘‘inundated’’ with requests to help businesses and, while the situation changed daily, sadly, there were a lot of conversations concerning redundancies and restructuring.

The big question the organisation had was about essential services and seeking clarification on what they were.

She acknowledged human resources staff that were ‘‘out there on the coal face’’ dealing with the practical issues.

‘‘They are the ones with personal relationships with their staff but are having some really hard conversations right now.’’

She also urged employers to apply for wage subsidies. Money was coming into employers’ accounts and the scheme seemed to be working quickly and well.

OSEA was ‘‘flat out’’ and staff would continue to operate from home, keeping people provided with information and updates. ‘‘We’ve got a lot of really worried people ... it’s just terrible,’’ she said.

OSEA and Polson Higgs will hold a free business Covid-19 information briefing in a live interactive webinar on Tuesday, March 31, at 10.30am. OSEA lawyer David Browne would cover the implications on employment relations, while Polson Higgs partner Henry van Dyk would provide information on the likely financial effect on business and business continuity planning. The webinar would be available afterwards.

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