Employers urged to top up subsidy

Companies will have to top up a $62.50 Government nine-day fortnight "allowance" or they will struggle to convince workers to join the scheme, unions have said.

Prime Minister John Key yesterday unveiled details of the plan, which emerged as the top idea from last month's Jobs Summit.

About 1600 companies with more than 100 staff will be able to put workers on Government-subsidised nine-day working fortnights to reduce their wage bills.

They must agree not to lay off any staff during that time and workers will need to agree to the proposal.

In return, the Government will subsidise wages of the workers with a minimum wage level "allowance" of $62.50 to cover part of the day - based on $12.50 an hour for five hours.

Workplaces can only sign up once for a maximum of six months in the 18-month period the scheme will run.

It will end at the end of 2010.

Prime Minister John Key said the number or workers expected to use it over that time were "rough and ready", but the best estimate was that it would cover from 20,000 to 25,000 - saving about 2500 jobs.

If the numbers were correct, it would cost $16 million to $20 million.

The Council of Trade Unions - which helped formulate the scheme - said it provided a strong basis for unions and businesses to negotiate deals which could prevent job losses.

National secretary Helen Kelly said the Government subsidy was "essential' to make it acceptable to workers, but she also expected employers to contribute to the costs.

EPMU national secretary Andrew Little also said employers would have to step in to top-up the lost wages.

He questioned whether workers would accept it given the level of subsidy - which effectively worked out at $6.75 an hour for a full working day.

He said workers had already had their incomes hit in the downturn as companies cut back on overtime and shift allowances.

Prime Minister John Key said it was up to individual workplaces how they handled any top ups, but he hoped there would be a mixture of contributions from the employer and a willingness from workers to give up some pay.

Minister of Social Development Paula Bennett said she was realistic about the scale of the initiative, which was to give "breathing space" to companies facing short-term difficulties.

"It will work for some businesses and not others - this is not the fix-all and we have to be realistic.

It won't save all jobs."

Companies on the scheme will be required to sign a contract with the Government, but Mr Key said it was partly relying on "good faith" and the ability of workers to police it in their workplace to ensure it was not abused by businesses.

If any abused it, the Government would "come down on them like a tonne of bricks".

Labour leader Phil Goff said the scheme was "helpful" but the Government needed to move quickly on help for smaller businesses.

Ms Bennett said work to help those businesses was under way. The Government also dropped initial plans to peg the scheme to training, saying it was too complex to co-ordinate and it was unfair to make the workers pay travel and child-care costs to attend training.

The scheme is expected to be mainly used by construction, retail and manufacturing companies which were hardest hit by drops in demand during the recession.

Employers' and Manufacturers' Association head Alasdair Thompson expected the scheme to be welcomed by those who wanted to cut back their staff costs during the recession, but were wary because of the difficulties in rehiring skilled workers after the economy began to lift. 

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