Coronavirus: Wage subsidy kept 89 percent of businesses going during lockdown - Sepuloni

The Government's $11 billion wage subsidy helped nine in 10 Kiwi businesses which received it survive the COVID-19 lockdown, says Minister for Social Development Carmel Sepuloni.

The Government has released details of a survey it sent out to more than 90,000 businesses which received the wage subsidy, to help keep staff on at a time when many of them were shut down or operating with limited capacity. 

Nearly two-thirds of businesses said the subsidy allowed them to cover other expenses such as rent, while 89 percent said it "meant they would be able to keep operating for the foreseeable future", said Sepuloni.

"Many employers said that the pace at which agencies put the subsidy in place was vital, offered peace of mind, and meant they would keep their staff. Only 6 percent of respondents said they intended to make staff redundant in the next few months."

Gisborne business owner Melissa Murphy told Newshub the scheme saved 33 jobs at her two hospitality businesses - as did the success of the lockdown at stopping the local spread of the virus, which has infected millions and killed hundreds of thousands around the world. 

"They got 80 percent of their wages, which in all cases was more than the COVID subsidy - I paid them that because they deserved it. If it had gone on any longer, if we hadn't gone to level three and been able to open, then it would have been a bit of a struggle." 

The scheme gave employers $585 a week for full-time employees for 12 weeks. An eight-week extension for those extremely hard-hit is also available. Murphy says this extension will be vital for many businesses, including hers.

"If we got it again for another eight weeks, I can guarantee we would be trading again perfectly. But the next eight weeks will be a bit tighter. We'll pay our bills and our mortgages... but there will be 33 staff that won't be on full money if we didn't top them up with their holiday pay." 

About 1.66 million workers benefited from the scheme, says Sepuloni. But it wasn't perfect.

"The survey also showed there may be some room for improvement with some businesses not knowing the full range of support available to them. Over the coming months we hope to learn everything we can from this feedback. This includes understanding how the wage subsidy has supported businesses of different sizes, regions, industries, and Māori or Pacific businesses."

With New Zealand likely to move to normality sooner than many other countries, it's hoped the recession caused by the lockdown will be brief. The Government is expected to borrow between $50 and $60 billion to soften the blow and get the economy moving again - more than it ever has in a single year, bringing debt to its highest level since the early 1990s.