Redundancy plan timing questioned

Mike Collins
Mike Collins
Business South has challenged parts of the Government’s proposed redundancy scheme, saying it is poorly timed.

The business support group has made its submission on the Government’s planned New Zealand Income Insurance Scheme after canvassing 1600 of its members throughout Otago and Southland.

The scheme, which was announced in last year’s Budget, would offer financial support to workers who were made redundant, or lost their job due to health conditions or disabilities, providing them with 80% of their income for up to seven months.

While Business South welcomed some aspects of the proposal, chief executive Mike Collins said there were also some concerning implications for businesses as it stood, particularly for small to medium enterprises.

There should be exemptions for businesses which already had appropriate redundancy provisions in place, he said.

Employers should be able to opt out if they could demonstrate an existing scheme was operating well.

Business South was also opposed to including health conditions and disabilities in the scope of the scheme because it would double the cost, he said.

Given the current inflationary environment and cost pressures on businesses, the scheme was poorly timed, Mr Collins said.

It was unfair to place another levy on employers while they recovered from the impacts of Covid-19.

Business South considered a more appropriate time would be in two to five years.

"It could be the straw that breaks the camel’s back for many," he said.

Mr Collins acknowledged there was some merit in the scheme, particularly as it proposed support for retraining and allowing time to match people to the right jobs.

"This means individuals will not be forced to take a job that underutilises their skills and provides lower pay merely to survive," he said.

The scheme had the potential to "soften the blow" for a region if a large employer shut its operations abruptly, Mr Collins said.

When contacted, Minister of Finance Grant Robertson said the inclusion of health conditions and disability in the scheme was agreed by BusinessNZ, the Council of Trade Unions and the Government.

The Government has heard a wide range of views on the scheme since consultation started in February and was now working through that feedback before details were finalised, Mr Robertson said.

"We’re committed to the introduction of a social insurance scheme and believe it could play an important role in protecting workers and their incomes, boosting productivity and preparing for the future of work."




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