Here's What I Think
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Unemployment

[This is unfinished work - your views are welcome by email.]

There are 77,000 unemployed people in NZ at a time when unemployment figures are lower than they have ever been (according to the Household Labour Force Survey).

How can we deal with this problem?

It has 2 parts - ensuring these people want to work and can find work - making employers believe it is worthwhile employing them, particularly when the beneficiaries have limited skill sets.

To ensure that unemployed people wish to work make it clear that not working is not a long term solution. The most obvious way to do this is to reduce their allowance each fortnight. Even $1 per fortnight serves to make them aware that this cannot be a way of life.

To encourage beneficiaries to take up job offers ensure their wages will be significantly higher than their allowance. We need to ensure that the difference between working and not working is at least $2 per hour. Otherwise why not go surfing? Or fishing?

The wage would have to be at least $2 more per hour for at least 35 hours per week. All other terms of employment would be normal except for termination.

If the employee leaves they would not qualify for unemployment benefit again for a further, say 3 months. [What are the rules now?]

If they were terminated the employer would have to refund any unemployment benefit contribution received over the last 12 months.

To avoid employers intentionally turning over staff they would be required to show that there had been no decrease in their full-time non-subsidised staff wage bill and head-count.

The amount of the subsidy would be 80% of the allowance for 6 months; then 60% for the second 6 months; 40% for the third 6 months reducing to 20% and ceasing after 2 years. Thus after two years the was-beneficiary is earning a reasonable wage with no contribution from the rest of us. Normal PAYE would apply. The total subsidy would be equivalent to one year of the benefit.

The mechanism for this process would be that the employer could claim those amounts off their normal PAYE payments. There must always be enough PAYE in total for the company to cover the claim. This would limit the amount any one employer could claim. Hence there would never be a need to pay an employer.

There would be no more pieces of paper.

What about it?

   
  © 2008 - Ian Mitchell
22A Goldie Street St Heliers, Auckland, Ph: 09 5851580
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