Budget 2021: Government designing social security insurance scheme to support Kiwis who lose jobs

The Government is teaming up with BusinessNZ and the New Zealand Council of Trade Unions (CTU) to design a social security insurance scheme to help Kiwis who lose their jobs. 

The Social Unemployment Insurance scheme would support workers retain about 80 percent of their income for a period after they lose their jobs. There would be maximum and minimum income caps.

The scheme is still in the design stages and no date has been selected for it to begin, but Finance Minister Grant Robertson says it would work like ACC does for accidents, but to cushion the impact of a job loss.

Robertson says it is an appropriate legacy project from the COVID-19 pandemic.

"COVID-19 has exposed how vulnerable employment can be and the risk to dramatic income loss from employment to unemployment," he says.

"Finding a job takes time and many workers may accept lower-paid jobs that don't match their skillsets, because financial pressures mean they need to work quickly."

The minister says that following the Global Financial Crisis, the Canterbury Earthquake and COVID-19, governments have had to institute ad-hoc programmes to support those made unemployed.

"BusinessNZ and the CTU asked to work with the Government to propose a more enduring solution and this is our joint response."

Over the coming months, the trio - called the Social Insurance Tripartite Working Group - will be consulting key stakeholders on the right settings, such as the balance between supporting Kiwis to find quality new jobs against the costs of running the scheme. Wider public consultation is expected later this year.

"We know changing demands and technologies will reduce demand for some skills and Social Unemployment Insurance is one way to give our workforce more flexibility to respond to this."

Robertson says many other countries have such a scheme and exploring one was a key recommendation of the Productivity Commission's Inquiry into technological change and the future of work.