Insurance

Big employers rail against $3.5 billion income insurance plan

Some of the country’s largest employers have spoken out against a government plan to introduce a mandatory income insurance scheme that would provide a new safety net for newly unemployed workers.

The scheme, first proposed in last year’s budget, would see people who lost their jobs receive up to 80% of their wages for six months, with the projected annual cost of $3.5 billion being financed by an ACC-type levy on workers and their employers.

Hundreds of submissions on the proposal were released by the Department for Business, Innovation and Jobs on Tuesday.

Countdown owner Woolworths NZ, which employs more than 20,000 people in New Zealand, said it understood the drivers of the proposed insurance scheme but did not support it as currently designed.

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The company said it rarely lays off staff, so the program “would take much-needed revenue from our team members’ take-home pay, to fund a program they likely never need or see.” never the advantages”.

“Our team members would actually subsidize other businesses or industries where layoffs are much more common,” he said.

The University of Auckland also opposed the scheme, saying the proposed employer contributions would result in an additional cost it had not budgeted for.

“It is estimated that this would take 75% of the funds we have currently budgeted for future salary increases at the University of Auckland, which are substantial at the moment due to the current job market,” he said. he declares.

Some employers, including transport giant Freightways, fear people will gamble with the proposed income insurance scheme by delaying job searches if they lose their jobs.

Peter Meecham / Stuff

Some employers, including transport giant Freightways, fear people will gamble with the proposed income insurance scheme by delaying job searches if they lose their jobs.

The university was also concerned that there was no guarantee that levies would not need to increase if the program cost more to run than expected.

Transport giant Freightways, which employs around 4,000 people in New Zealand, has expressed similar concerns to Woolworths that the scheme could see the company and its staff subsidize businesses with higher staff turnover.

“The majority of staff have long tenures with Freightways, often moving between companies as they progress in their careers.

“In comparison, Freightways is aware of many other major New Zealand industries and companies that are almost regularly downsizing through ‘cyclical’ redundancy processes,” he said.

“As such, Freightways is keen to ensure that any revenue insurance scheme includes appropriate protections and incentives for companies to avoid cross-subsidization by companies such as Freightways from organizations that pursue travel programs far more aggressive.”

Freightways also said it was concerned people were “gambling” the insurance scheme by not returning to the workforce as soon as they otherwise would after being laid off.

Countdown owner Woolworths fears its 20,000 employees will derive little benefit from their levies.

Robyn Edie

Countdown owner Woolworths fears its 20,000 employees will derive little benefit from their levies.

“Limits should be placed on the number of claims people can make for displacement situations, rather than health-related claims, to mitigate the possibility of repeated claims of exploitation,” he said. .

Meat company ANZCO, which employs 3,000 people, also spoke out against the proposed insurance scheme, saying it could have “perverse effects on the labor market, especially for seasonal workers”.

“We are concerned that seasonal employees are playing the system by offering them the option of receiving 80% of their salary for six months, which would make workers less inclined to seek permanent jobs and encourage workers to seek an “update”. “seasonal” foot, he said.

But the proposed income insurance program received strong support from trade unions, including E Tū.

As its members lost their jobs, they also risked “losing the ability to meet the necessities of life — like their weekly groceries, bills, and rent or mortgage,” he said.

Trade body Business Central said it could not support the program in its current form, saying the concept that the program would support workers who have lost their jobs due to illness or disability as well that a dismissal amounted to “scope drift”.

“The inclusion of sickness and disability cover doubles the cost and makes forward planning of the scheme’s liability deeply uncertain,” he said.