National’s 9-day fortnight will save only 2-3% of the jobs that are expected to be lost in the recession. It’s a trifling investment of only $20 million. It makes no effort to get workers into training. But the deep, dark secret is it is geared to the gain of business, not working people.
Here’s the fortnightly costs of the scheme for each batch of 10 workers (9 of whom would have kept their jobs anyway and one who would have lost their job). In this example, the workers are on the full-time average wage ($22.89 an hour). Income tax is taken into account.
The business is actually better off with the 9-day fortnight than it is just firing one person. The 10 workers lose over $1300 a fortnight to save a job paying $1500 a fortnight after tax. The company, on the other hand, gets $450 a week more in savings on its payroll. Not only is business not being asked to carry any of the cost of this program but half the government’s spending is a further subsidy to business.
It doesn’t have to be that way. The third example in the table is what would happen if workers were asked to give up only 8 hours and each hour was compensated at the minimum wage (in National’s scheme workers give up 10 hours and get only 5 compensated). The workers lose $65 dollars a fortnight each instead of 130 each. The government pays $200 more a fortnight but there’s no hidden bonus for the business. It would be possible to go further and make a scheme where the business has to compensate workers for, say, half of the their lost wages so that business bears some of the burden too.
– the mathemagician