nine-day fortnight work plan released
In one sentence, Government will pay minimum wage of $12.5for up to 5 hours per day to employees who have taken an extra day off. For rest of the scheme:
- Will be available to businesses with more than 100 employees. There are about 1600 companies which fit this category and they employ 580,000 people.
- Will be available to businesses from March 27, 2009 through until December 31, 2010 - but only for up to a six month period within these dates.
- The government’s contribution will be paid direct to employers to give to the workers it has negotiated a voluntary agreement with to reduce work hours to a nine-day fortnight.
- Will be available to up to 10 employees for each averted redundancy.
- Will apply to employees who have been full-time for the two months preceding going into the scheme.
- Is anticipated to be picked up by between 20,000 and 25,000 workers, making the approximate cost $16 million to $20 million.
Overall I'm pretty happy about it, and I think it will be a way reduce redundancies in big companies. In a recession the most import thing to maintain is not just economic growth, but fundamentally, confidence. If employees are given the promise that they will not be made redundant, it will give them confidence, and they are more likely to spend rather than save for the unforeseeable future.
But I do have a mixed feeling about this. Employees are not responsible for the current economic situation, making them suffer should be the last resort to keep this economic going. There are long suspicions that some employers are using economic recession as an excuse to carry out restructuring. I think this scheme should only be available for companies who are experiencing losses, not just a reduction of profits. I can see the same greed which was responsible for the current situation, is still in the market. Companies should just accept a significantly reduced profit for now, rather let the same greed take over, dreaming of the high profits they've experienced in the last few years.
The scheme will only work if employers are welling to join it, but I don't think they are. As a employer, how much can you save from this? Let's assume a company maximises its opportunity, put 10 employee who receives an average $20 wage and work 8 hours a day in this. So the calculation goes like:
13 x 10 x 20 x 8 = $20,800
For a 100 employees company, that's kind of nothing - make one employee redundant saves more than this, and that size of businesses don't fail for short of 20,000 dollars.
Or maybe the whole thing is just another publicity stunt from John Key?
