The recent news of 45 employees of the construction company KB projects left in the lurch as the owner announced ceasing of operation via WhatsApp message highlights the need for a social unemployment insurance scheme.

Most other developed countries have such a scheme in some form or shape. According to data shared by NZCTU (New Zealand Council of Trade Unions) President Richard Wagstaff, nearly 100,000 Kiwi employees lose their jobs every year. There were also big number of jobs lost due to Canterbury earthquake and recent Covid-19 pandemic.

 

Earlier this month, Finance Minister Grant Robertson released information about proposed income insurance scheme, initially talked about in Budget 2021. Scheme proposal is now in public domain for consultation. People can submit their responses before the consultation closes on April 26.

 

Designed jointly by the Government, Business New Zealand and the NZCTU, the scheme will be administered by Accident Compensation Corporation (ACC), with an aim to provide a cushion for people made redundant, laid off and lose their job due to disability or a health condition. Under the scheme such workers will receive 80 per cent of their salary for up to seven months as well as support for re-training.

 

The scheme will be funded by levies on wages and salaries, with workers and employers both contributing an estimated 1.39 percent each.

 

Under the scheme, permanent employers would need to give four weeks’ notice to the employee, and provide four weeks pay at 80 percent after the job end. The employee will then receive 80 per cent of the income for up to six months.

 

People would be encouraged to take on casual or part-time work to earn up to 20 per cent of their previous income. The scheme would be capped at salaries of $130,911 a year.

 

The scheme is still a work-in-progress with active consultation submissions sought from public with a target of implementation in 2023.

 

Scheme Eligibility:

•          Workers would be eligible after having made six months of contributions within the previous 18 months.

•          Parental leave is covered

•          Fixed-term and seasonal work is covered up until the original end date of employment

•          Casual workers who can show reasonable expectation of future income will be treated like permanent workers  

•          People working multiple jobs are eligible if they lose a job that provides more than 20 percent of their income

•          Feedback is being sought on coverage for contractors and self-employed people. "We want to protect people who genuinely lose work for reasons beyond their control, while not covering people who may choose to close their work down in order to access the scheme."

•          Health and disability-related job losses will also be covered, helping address the disparity between support offered for accidents compared to other health conditions or disability

You can have your say by completing a short survey or a detailed submission before 26 April 2022. Proposal documents are available at https://www.mbie.govt.nz/