11 Sep 2020

Benefit rate 'far too low' as more people expected to apply for jobseeker support

5:38 pm on 11 September 2020

A total of 7538 people have come to the end of their Covid-19 Income Relief Payment (CIRP) in the week ending 4 September.

Man trying to find work with online job search engine on tablet.

Photo: 123RF

The scheme - which runs for a 12-week period, and supports those who lose their job due to the pandemic - has been running since 12 June.

Data provided by the Ministry of Social Development (MSD) shows while 1414 people were granted the relief payment, that was far outweighed by the number of people who came to the end of their three-month stint.

With thousands of people unable to find work, it is assumed many will be moving across to the Jobseeker Support.

That means a dramatic drop in income.

"They go from a payment of $490 a week, down to $251 if they're a single person," Institute for Governance and Policy Studies senior research fellow Michael Fletcher said.

"That's a very large drop, and what it shows up, to my mind, is the government hasn't addressed the fundamental problem with the benefit rate being far too low.

"At the beginning, when they brought in this short-term thing which you can say, well that's to allow people to adjust.

"But they haven't dealt with the real problem which is that benefit rates are very low, only 25 percent of the average earnings for a full-time worker, and $250 is all people are going to have."

He said there was an urgent need to reform the benefit, and warnings had been issued since the beginning of the pandemic.

'Surprised' at the lack of people finding work

Over the same week (ending 4 September), just 138 people cancelled their CIRP because they found work.

It's the first time the number of people coming off the CIRP has outnumbered the people going onto it. While the previous week (ending 28 August) there were 24,811 people receiving the CIRP, that number is down to 18,608.

The previous week, it was just 162 people who cancelled because they found work, and the week prior to that, it was 193.

Nearly 3000 people signed up to Jobseeker Support over the week as well, although roughly 1300 people left it because they found work. It means the total people on the benefit is now at 198,929.

A previous report by MSD found that the number of people who went on the benefit during the level 4 lockdown skyrocketed.

"There are still jobs out there, so yes, I was a bit surprised there wasn't [more] flying off the Covid payment back into the job, and that's not very encouraging," Dr Fletcher said.

"That's a lot smaller than the number of people whose CIRP has finished and who are now going to be moving onto Jobseeker Support."

Reliance on third round of wage subsidy

The data from MSD also showed 60 percent of all jobs being supported by the wage subsidy are on their third and final round of the scheme.

In total, 375,447 people have their jobs backed by the scheme, of which 259 are on the original wage subsidy, 149,944 were for the extension wage subsidy, and 225,244 were for the resurgence wage subsidy.

The third and final round was available for businesses to apply for between 21 August and 3 September, and lasted for just two weeks.

In total, $13.9 billion has been paid across the scheme's existence. But with no more opportunity for businesses to apply, there is uncertainty what future awaits businesses and employees when the subsidy finally ends.

In a statement, Social Development Minister Carmel Sepuloni said: "This is a one-in-100 year shock and we always said we would not be able to save every job, but we are making sure we are cushioning the blow for households and families by increasing support for people are not in work."

The CIRP scheme was intended as temporary payment financial assistance to minimise disruption for people made unemployed by Covid-19, she said.

"Lifting families and individuals out of poverty is important to us as a government. I recognise the significance of income adequacy for beneficiaries in order to achieve this and that's why it has been a core part of our programme to overhaul the welfare system. In the last 16 months since receiving the Welfare Expert Advisory Group's report, work is already underway on around 22 of these recommendations."

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