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  • rmacculloch

Message to Chris Luxon: Do you know the difference between unemployment insurance & wage subsidies?

To help those suffering from Cyclone Gabriel's impact, National's Leader Chris Luxon "backs a wage subsidy as well as looser immigration settings & emergency legislative powers" according to Newshub. The wage subsidy scheme was used during the Covid lockdowns.

Is this the same Chris Luxon who attacked the government's proposed Unemployment Insurance (UI) scheme as an awful piece of legislation? He called it a "job tax".

So what is the difference between the wage subsidy scheme which Luxon loves and the UI scheme that he hates (which the Finance Minister proposed)? Both pay workers around 80% of their previous wages. Not much difference there.

In fact, the wage subsidy is a badly designed UI scheme since it pays money to businesses - not to workers direct - so is open to fraudulent claims from businesses that never needed the money. Proponents of the wage subsidy say that it keeps workers attached to their jobs, but UI can be designed the same way - in the US, there is a category of unemployment called "temporary layoff", being workers that receive UI & expect to be recalled to their workplace.

Luxon may return the argument by saying that the wage subsidy is not funded like the proposed UI was going to be - through tax contributions by workers and their firms. But that would be nonsense, since his wage subsidy must also ultimately be funded by taxation.



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