25 Aug 2021

Many big businesses not applying for the wage subsidy

11:29 am on 25 August 2021

Applications for the wage subsidy have been coming thick and fast, with 128,000 since the scheme opened on Friday and almost $500 million already paid out.

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Grant Robertson has confirmed so far only one firm employing more than 500 people have applied for the wage subsidy. Photo: RNZ / Samuel Rillstone

But the country's biggest employers are notable in their absence with Finance Minister Grant Robertson confirming only one application by a firm employing more than 500 people had so far been made.

The subsidy covers a two-week period, paying $600 a week for each full-time employee and $359 a week for each part-time employee.

Small Business Voice chief executive Max Whitehead said that money bought struggling firms a bit of time.

"That's something that they've really got to lean on. It certainly still won't be a lifesaver, most of them will still be struggling, but it may hold them together for a period of time to cope in the short term."

He said if the lockdown goes on much longer there would be casualties, with many having headed into it without much in reserve.

"They want to expand their business and grow it and of course that's what they do, they grow their business, they put their money back into the business, invest in more equipment, more employees, those sort of factors.

"And of course, when it all comes crumbling down like it does to level 4, they just hold their breath and just hope that we're going to get out of this very, very soon."

But while small businesses were jumping on the assistance packages, larger employers did not appear to be.

First Union's Jared Abbott suspected why.

"Some of these bigger companies have not liked the scrutiny on the massive profits that they made off the back of Covid."

He said many had also been able to operate to some degree under this level 4 lockdown, when they could not last year.

"A lot of companies seem to be taking a very broad interpretation of what an essential services is and a lot of the companies that were shut down, especially distribution centres and stuff like that in the first lockdown, have decided that this lockdown they're essential services.

"And I think that's reflected on online shopping. If you look at a lot of these retail sites, if you actually start to go through the products that they've got available, they're just not essential service products... And I suspect that's not being heavily policed by the government because they're probably quite happy about not paying out so many subsidies."

He said First Union had made several complaints to the Ministry of Business Innovation and Employment off the back of concerns from workers they are being asked to do non-essential work, such as fill online orders for non-essential purchases.

Abbott said some employers did not want to apply for the wage subsidy and were instead telling staff they had to use their leave, including sick leave, or not get paid at all.

"Companies say, look, we're not allowed to open, but we're also not going to apply for the wage subsidy, and therefore trying not to pay people at all. That's one of the reasons we've actually started a petition to say that the government needs to actually not just make it a law that people pass on the wage subsidy, but actually, that people are required to apply for the subsidy and pay workers.

"We saw it last time, a lot of these companies use it as an opportunity to get down on the annual leave balances by forcing people to take annual leave or sick leave, now there's increased sick leave provisions."

Max Whitehead said applying for support should be easier for small businesses.

"The resurgence process is pretty arduous. I'm hearing reports that just filling out the application is very difficult so if a message could get to the beehive it would be please make the administration process of this a lot easier for these guys."

The resurgence support payment is for businesses that have a 30 percent drop in revenue and covers other business costs apart from wages.

Businesses that have staff away while they await test results or who are self isolating can also apply for money through the leave support scheme and the short term absence payment.

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