NZ Election 2020: Labour unveils $311m expansion to Flexi-wage scheme to get 40,000 Kiwis in work

Labour wants to expand a scheme which subsidises employers who take on new employees otherwise at risk of long-term unemployment.

The existing Flexi-wage subsidy scheme was introduced in 2012 by then-Social Development Minister Paula Bennett. Labour leader Jacinda Ardern on Saturday promised to boost it by $311 million, aiming to get 40,000 Kiwis back in work. 

"The new Flexi-wage scheme is a key plank of our economic plan to support businesses to recover and to provide jobs to those who have lost work due to COVID," Ardern said at the Labour Party's campaign launch event.

"It will directly help businesses who are getting back on their feet after lockdown to take on new staff while also supporting those New Zealanders who have lost their jobs to get back into work and off a benefit quicker.

"Our team of 5 million's approach to fighting COVID means there is huge willingness in our business community to avoid unemployment rising by retaining staff and taking on new employees where they can, but many just need a little bit of extra support to do that, which this package provides."

More than 20,000 Kiwis are presently receiving the COVID-19 Income Relief Payment, a sort of unemployment benefit for those who lost their jobs due to the pandemic. It's worth about double the normal Jobseeker Support benefit.

"With over 20,000 New Zealanders now receiving the COVID-19 Income Relief Payment and more on the unemployment benefit it is critical we are doing all we can to help get these often skilled workers back into jobs as quickly as possible," Ardern told Labour members and supporters at the Auckland Town Hall. 

In 2019, 6000 employers accessed the Flexi-wage scheme, getting an average of $3500 each - costing around $21 million.

"Under our proposal, we will double the value of the wage subsidy to an average of $7500 and ensure that far more Work and Income clients, including those who may be on the COVID income support payment, are eligible for this scheme."

The maximum on offer per employee will be $22,000.

About $30 million of it will be ring-fenced for an expanded Flexi-wage self employment programme, "which will provide the equivalent of the minimum wage for up to 30 hours a week".

"It's important to encourage entrepreneurship and innovation as part of the COVID recovery without forcing people to use their retirement savings to get back on their feet," said Ardern.

"Those without formal training qualifications, those over 50, disabled people, and Māori and Pasifika workers will disproportionately bear the brunt of an economic downturn. The scheme is designed to support those hardest hit to find work again."

The exact amount employers can get is decided on a case-by-case basis with the Ministry of Social Development. 

The Flexi-wage scheme to date has been a success, Ardern said.

"Evaluations show it generates $7 in benefits for every dollar invested and that 70 per cent of people hired during the evaluation period had a job at the end of it."

The $311 million price tag is affordable thanks to fewer employers requiring the wage subsidy extension than initially predicted, Ardern said, "rather than drawing from the COVID Response Fund which we intend to preserve in case it’s needed to fight the virus again, or to reduce our level of debt".

The election is on September 19.