The Government is promising to pay workers who lose their jobs due to the coronavirus crisis more than double the unemployment benefit, in a newly announced $1.2 billion scheme.
The weekly “income relief” payments, set at $490 a week for full-time workers and $250 a week for part-time workers, will be given to workers instead of the unemployment benefit, if they lost their job due to Covid-19 after March 1.
Finance Minister Grant Robertson, announcing the scheme on Monday, said the payments were needed to help workers during a “1-in-100” year recession.
“”People who have been in work have suffered a very sharp income drop, and that obviously that’s very unexpected because of Covid-19 … It’s a recognition that we need to cushion the blow for people,” he said.
The untaxed payments are more than double that of the jobseeker benefit for a single person aged over 25-years, which are currently set at $250, after tax.
The scheme is expected to cost $1.2b, but will save the Government $635 million in paying unemployment benefits, meaning an additional cost of $570m. The money will come from the Government’s Covid-19 response fund.
The payment will be available to people who lost their job after March 1, and will be available until November. After 12-weeks, any unemployed workers will have to take the jobseeker benefit.
People with partners who earn less than $2000 each week will be able to receive the payments — people in such arrangements have been unable to access the jobseeker benefit.
There will be an expectation that people are available for work, look for work, and take job opportunities — as is the case with normal benefit payments.
Asked whether the payments amounted to welfare for the middle class, Robertson said the payments would act as a “cushion” for people who have sharply and unexpectedly lost income in a crisis that “came from no-where”.
He said the Government had increased the income provided to the unemployed through the job seeker benefit, and the income relief scheme was not an acknowledgement benefit levels were inadequate.
The Government decided not to tax the payments, in order to avoid an administrative burden and get the payments out quickly.
He said it was difficult to calculate how many people would take up the payments, and the Government remained open to extending such a scheme if required.
Social Development Minister Carmel Sepuloni said a “new cohort” of unemployed may have high-living costs compared to previous earnings, and may not find work as quickly as they would during normal times.
The payment would provide “breathing space” for these people, she said, and the scheme resembled similar income relief schemes used after the Christchurch Earthquake and the Global Financial Crisis.
“The employment market is very different because of this unprecedented event, that is why we’ve taken this measure,” Sepuloni said. Some 4000 people have been redeployed in May.
The payments will not be available to non-resident workers who are out of a job, who are excluded from the welfare system though have received support from Civil Defence and Emergency Management.
Those receiving income relief payments will still be able to apply for other welfare payments, such as the hardship grant or accommodation supplement.