- Date published:
7:00 am, June 1st, 2020 - 65 comments
Categories: business, Economy, employment, jobs, minimum wage, national, Politics, todd muller, unemployment, wages, welfare, workers' rights - Tags: 90-day trial, corporate welfare, dan bidois, JobStart
It must have come as a great relief for Todd Muller when he managed to announce National’s first new economic policy under his leadership called JobStart. It might be stretching it to call it a Captain’s call but it is a start, a baby step for a big guy with so much business experience.
So far, I’ve seen little analysis of this policy but this could be explained by the long weekend. Alternatively, there is just little to criticise and the details still need to be worked out – the Devil is always in the detail. I am by no means an employment expert but I cannot shake the feeling that we, and perhaps National, are missing something.
According to the handy factsheet:
We will require businesses to sign a statutory declaration – similar to the wage subsidy scheme – which includes employer obligations, including a requirement that the job is genuine, permanent and offered in good faith. [my bold]
That sounds good, on paper. The $10,000 to the employer is exempt from income tax, as is the case with the Wage Subsidy Scheme. However, I assume that the new hire will have to pay income tax on their income. As it happens, $10,000 over 90 days is pretty much equivalent to the minimum wage rate. This means that it will be taxed at around 15%.
Of course, this doesn’t mean that all new hires will be on the minimum wage, but employers could have an employee for free for 90 days if they wish and they wouldn’t have to contribute a cent. To me, this means that the Taxpayer might carry all financial risk. Hmmm.
The other thing that I don’t quite understand is how this policy aligns with the 90-day trial period for businesses with 19 or fewer employees. Although the job may be permanent, the employee can be given the boot within 90 days if this is written into their contract before they start working.
On the 90-day trial period, it is interesting to note that Dan Bidois is calling for full re-instatement of the 90-day trial period. In case you don’t know who Dan Bidois is, he is the MP for Northcote and ranked at #46 on the National Party list. According to Mr Bidois, he owes his current high ranking to merit and not because he’s of Māori descent. I like his self-deprecating irony 😉
There is also a feeling of National trying to pick winners. The businesses that are really struggling and fighting for survival are less likely to hire new staff, I’d think.
In any case, JobStart has been capped at 50,000 jobs in the first instance with a budget of $500 million. Let’s hope it won’t turn into a giant job-rotating scheme with downward pressure on wages but instead that it will help to create genuine jobs that are fulfilling and sufficient to support a decent living.
A few things around his announcement.
"Todd Muller wants JobStart policy in place 'within weeks'….."
Then this back at him: "Finance Minister Grant Robertson has said he is prepared to consider the JobStart policy, while adding the Government focus is on keeping people in work and creating new jobs now – not in November."
Gets better though: "As the Minister, Mr Robertson can direct officials to fine-tune the policy and implement the administrative details to get this up and running immediately," he said.
Seems to me he doesn't actually have a policy, just a set of speech notes.
'His' idea, that he expects others to provide the detail on? That's because he knows it's full of fish hooks!
There's similar programs already. WINZ have two schemes to set people up in their own business, the Self-employment start up payment, and the Flexi-wage for self-employment
The start up payment is up to $10,000 in a 52 week period, and Flexi-wage gives up to the minimum wage for 30 hours a week, for up to 52 weeks.
Both are equal, or better than Muddler's suggested scheme.
I couldn't find anything that goes direct to an employer but it's probably there as well.
The thing looks like they got a heads up from someone working up a programme in WINZ or MSD and popped out an announcement making out that it's their idea. sigh.moan had form at this.
Both of those polices are only open to people who are on main benefits or qualify to be.
Muller's proposal is the money is paid to the business, not the employee.
Those polices are a faint shadow of what Muller is proposing.
But the idea that Graeme has outlined is for the money to be paid to someone who is wanting to start their OWN business, they may have been an employee but are now looking to do the hard graft to start something new. That's not what you say iceblocks.
You may have spotted their agenda.
November is the start of the horticulture season all will be putting on new staff, just as they do every year how ever this year they will call them new jobs get $10,000 for each and after four months give them the flick, Muller has been in Horticulture long enough to know this, I have also been in horticulture for 40 years and 25 or so years ago there was a job creation scheme and it was full the same ripoffs
"a requirement that the job is genuine, permanent and offered in good faith" covers this.
In good faith ??
It would cover it if they didn't reinstate the 90-day trial period. With the 90-day trial, it opens up an obvious scam: the job was permanent but this particular staff member didn't work out. Oh, and then we had to restructure and now we have this new job for which we'd like $10 Gs, please.
Like that is going to work.
Already seen first hand, how the subsidy for long term unemployed, works, combined with the ninety day rule, with employers like fast food, hospitality and crop picking.
Some trade employers may use it honestly, but I think National's plan will only work, which may well be the underlaying intention, to get short term subsidised cheap employees, for businesses that used to use backpackers and work visa's.
I get the impression that his basic idea is that the economy seems dead in the water, but if thrown this lifeline it may start to swim again.
So Muller frames small business as an heroic endeavour, to rescue us all. Robertson cites the method as traditional and current – but didn't say that it actually works.
Almost. He wants us to believe that the economy is dead in the water and then to be miraculously saved/rescued by the only one(s) with the skills and knowledge. All he wants (from us) is to be given the power to enact and complete his fairy tale story. And we lived long and happily ever after in Middle-Management Earth after the Princess and the Knight had eliminated the wicked virus with the help of the five million dwarves. The End.
Ah, mythos. Always under-rated as shaper of the forces of history. Somewhat more prosaic is Brian Easton in his new book:
And, despite more observers categorising him as leftist himself, he's right that a dispassionate overview is necessary to inform someone fully. Michael Reddell has this interesting observation:
Economic historians often illuminate causal relations that nobody else perceives, that produce political consequences. I await analysis from both – when the two recovery plans are made available to the public in full.
Uhhmmm, ok, but how is this relevant to Todd Muller and his framing of the economy and his ‘rescue plan’?
If you don’t mind me saying, you do seem to have a habit, intentional or accidental, on going off on a tangent and losing just about every other commenter here and presumably readers as well. I assume you’re interested in assisting change and the necessary debate and dialogue rather than using TS as a soapbox for unidirectional monologue. IIRC, you recently said as much.
Oh, I assumed that would be evident – I assume the policy advocated is a key part of the foreshadowed National plan. Which cannot be evaluated by economists operating as economic historians until it is revealed in full, when they get the opportunity to say `yep, it worked here & here', specifying those historical instances. And the plan which Grant evolves in consultation with the public service, likewise…
No, it was not evident, at least not to me, which was my point.
I still don’t quite get the role you see for economic historians. Any economic plan needs to be thoroughly reviewed and analysed (modelled, if you like) and be based on best available evidence. We don’t and can’t wait for a historian to write a book about it!
Yes but in their blogs these guys do provide real-time analysis of policy & application. I read them due to that relevance & learn from them sometimes. Both National & Labour use traditional economic practice, and as someone who has long believed that to be wrong, I feel it is necessary to try & glean accuracy of match between theory & practice.
If they reason that the plans are viable due to matching with prior historical circumstances, that will impress most readers (I, as a natural sceptic, don't matter) and thus seem credible to the politicians who must operate in accord with the beliefs of voters. Whether it fits the neoliberal prescription or the socialist prescription doesn't matter – it has the mandate of tradition. Or, as Confucius would put it, the mandate of heaven. If I was more erudite, I'd quote him to reinforce the point!
Ok, I’m going to make a crude and provocative statement:
History can teach us what worked and what didn’t and possibly tell us why. However, it cannot predict the future.
In other words, the further you extrapolate and the more you deviate from (historical) data, models, and knowledge, the more uncertain the prediction and analysis becomes. In the end, you are just waving your hands around and looking up to the sky chanting learned words that have lost all their meaning and purpose.
To mitigate risk, especially when risk averse such as in politics, economics, and finance, for example, any change will and has to be incremental by default. Given that these systems are enormously interwoven and complex, they tend to be buffered against change, and they absorb external and internal shocks. So-called paradigm shifts, i.e. major shifts in thinking, understanding, and acting, do not just occur but have to be actively implemented, enforced almost, at great cost of effort and energy. The other opportunity for major change is after blunt trauma such as (global) war or (global) disaster such as a pandemic.
We have dodged a bullet and now some people say that there never was a bullet in the first place. That’s not learning anything from history, but is maintaining wilful ignorance through stubborn and dogmatic denial.
Oh yes, all true. Yet the sad fact is decision-makers tend to be guided by economists. Dead economists, primarily, as some wit once pointed out. I don't claim to be wise enough to know why. I actually haven't got a clue. 😕
This meme is now endemic and there’s no vaccine.
"Yet the sad fact is decision-makers tend to be guided by economists. Dead economists, primarily, as some wit once pointed out. "
Nothing wrong with dead economists, so long as you are particular about which (dead) economists you give credence…after all human behaviour hasn't changed in millennia.
It's $5K at commencement and $5K after 90 days, I think.
Surely businesses only hire worker when the work demands it. JobStart seems to miss that crucial plank of free market capitalism.
I'd rather see a commitment for government departments to pick up some school leavers and particularly young Maori who the labour market won't employ. At least then they will be paid a decent wage, with that money going into communities that need decent wages. Areas that National ran down like DOC in small communities would be a good start.
Stopping centralising government jobs in Wellington would be another good option. Technology allows people to work from anywhere – as COVID has shown. Spread the jobs out to the regions.
The role the public service plays in supplying good regional jobs is so underplayed by successive governments. That is taxpayer funds going back into communities.
Too many Wellington based empire builders I'm told.
And a lot of the large companies have transferred most of their jobs into Auckland. Telco's, banks, kiwirail costing us a fortune in infrastructure they won't be paying for.
Incentivize them to move – plus drag back some more of those call centres from overseas or enable staff on the ground to actually do stuff.
[Fixed typo in user handle]
…employers could have an employee for free for 90 days if they wish…
…Dan Bidois is calling for full re-instatement of the 90-day trial period.
They're neither inconsistent nor incompetent. Their weaselry is very consistent and they know exactly what they're proposing.
"That sounds good, on paper. The $10,000 to the employer is exempt from income tax, as is the case with the Wage Subsidy Scheme."
Haven't looked at the Nat proposal in any detail but the wage subsidy IS subject to taxation (though not GST)
Not as it enters the employers bank account in a lump sum, but definitely taxed when passed on to employees each week.
classed as a compensatory payment and therefore counted as income
For the employer, employee or both?
for the party that receives it….employees don't receive it (directly)
With the wage subsidy, as an employee I do pay tax on it, including student loan. I sure think my boss didn't paid tax on it when she received the lump sum from the government.
Edit: Posted before reading the exchange below 🙂
yes you as an employee would pay tax…no dispute…I didn't think the employer was tax exempt, but it appears they are…sole traders and self employed (myself, which was why I disputed original position) are not
have just checked and different application for sole traders and self employed as opposed to employers
"Please note that the tax-free treatment in respect of employers who receive the wage subsidy for their employees does not apply to self-employed people who receive the subsidy for their personal loss of income. The subsidy will only be tax free as excluded income for a self-employed person to the extent it is used by them to subsidise wages of their employees."
In the context of JobStart, it seems that the new hires will have to pay income tax as per usual, which is what I assumed and wrote in the OP.
This ‘new’ policy was clearly put up with haste. It borrows heavily on previous and existing ideas and schemes yet it is feather light in terms of detail. Details are important, as any manager would know.
Lets look at the track record of National whilst they were in government when it came to workers.
They had one leader who took delight in pulling the ponytails of female staff at their local cafe and deemed the action as being 'all in good fun'.
They have one MP who pushed his way through and past a airport worker whilst claiming he was 'running late for a plane'.
Another former National MP was angry a waiter didn't know who he was whilst another MP used workplace bullying towards his staff within parliamentary grounds.
Another eventual leader of the NZ National party claimed low income workers were living beyond their means and MUST experience financial cutbacks but was caught out DOUBLE DIPPING on the same NZ taxpayers he was denigrating.
There wasn't a peep of concern by the National government of the time when it came to employers like Bunnings having Zero Hour contracts.
In fact I am sure National would be comfortable(using one of John Key's pet words)with Zero Hour contracts and the 90 day employment program whilst paying employers $10,000 per employee at the same time.
It would be a win/win situation for National and devious employers and a no win situation for workers.
But then when has National ever cared about low income NZers in what is well known as deliberately kept low income NZ?
Do you really want to have a to and throw about bad things Nat and Labour MPs have done, as it is pretty ugly on both sides.
If you cannot address the actual comment, please don’t derail the OP with whataboutisms and theydidittooisms, thanks.
I can't see why you think the two policies are inconsistent.
You need to bear in mind that New Zealand already has the 90 day trial period, albeit limited to SME's with less than 20 people. So any job creation programme implemented by the current government has that as a factor.
I wonder if Labour will campaign to eliminate the 90 day trial period altogether? Obviously the Greens will, but we have yet to see if Labour will have that as a policy. It is my prediction Labour won't, but time alone will tell.
I can't see why you think the two policies are inconsistent.
The evidence suggests that the 90 day policy adds nothing to increased hiring of staff,hence the two policies are incoherent as treasury suggests ie not statistically significant.
We find no evidence that the ability to use trial periods significantly increases firms’ overall hiring; we estimate the policy effect to be a statistically and economically insignificant 0.8 percent increase in hiring on average across all industries. However, within the construction and wholesale trade industries, which report high use of trial periods, we estimate a weakly significant 10.3 percent increase in hiring as a result of the policy. We also find no evidence that the policy increased the probability that a new hire by a firm was a disadvantaged jobseeker for a range of definitions of disadvantaged jobseeker: beneficiaries, jobseeker beneficiaries, non-workers, recent migrants, youths under 25 years old, Māori or Pasifika under 25 years old, or education leavers. This result holds both over the economy as a whole, and in the high-use industries. Trial period policy also does not appear to have affected the probability that a newly hired worker remained with his employer for at least two, five, 12 or 24 months; the policy seems not to have substantially increased short-term hiring
At present the NZ economy is undertaking a recovery from a shock (a singularity) there is significant evidence that it can be resilient (record household bank deposits) and the paydown of personal debt (credit cards and consumer finance) along with trading surpluses,that we (nz ) may be on the path to living within our means for the first time in a generation.
I also doubt that Labour will campaign on getting rid of the 90-day trials. It would be a huge risk of upsetting the business community for essentially a psychological but not structural victory. All research that I’ve seen points to potentially a small positive effect for businesses and not much (!) evidence of businesses rorting it and exploiting employees. For Labour there is little gain and much to lose. Therefore, it’ll stay IMO. With National in charge, OTOH, it’ll be different.
Wayne NZ first is the soft edge of the National Party I would say Labour would like to make the 90 day trial fairer though.Small businesses like this policy because it allows them to hire productive staff.
Many young ones don't turn up to regimented work routines ie no work ethic.While their are a few rogue employers out there who are getting found out.Many small businesses can't afford to have employees who can't carry their weight .Those SME 's make up a good percentage of voters now .
Wage Subsidy Scheme is taxed. Not sure where the author thought that it would be exempt from Income tax. Or does PAYE not count, cause the wage subsidy that i paid to my staff sure as hell was taxed. She paid income tax on that. To the point where the 585 only amount to about 490$ for full time.
as for National? Like labour/Greens/NZfirst/ACT etc they are finding themselves in times where non of the old bullshit works and its now just time to grab, loot, n run. Global warming, global recession/depression, global pandemics etc and sure enough you run out of good ideas. Couple that with the fact that there is not one person in the National Party that actually is working for the country rather then their own collection of fancy and overpriced shoes and boom, they are not only incompetent, but also inconsistent and often times malicious. What else is new?
It is in the Q&A in National’s factsheet that I mentioned in the OP:
It is also discussed in the thread @ 8 😉
Yes, and as I said in my comment, The Wage Subsidy Scheme is TAXED via PAYE. So is not exempt from income tax.
While you said:
that is what i refereed to. Nothing to do with anything else. And i would like to point out that the wage subsidy scheme is intended to go to the workers and should not be gobbled up by employers.
All good, we’re both right today 😉
The JobStart handout of $10,000 obviously goes to the worker too unless the employer is doing something dodgy. The worker pays income tax on that, the employer does not.
Preferable would be a scheme whereby the $10,000 was only paid after the hire was employed for 6 months.
But better still subsidise on the job training – $10,000 for one year paid by both government and employer – $20,000 half the MW for a one year training position.
I don't think we need to take too seriously a policy that has little to do with business or jobs – except Todd Muller's own. He needed to announce something – anything – to get the media to change the focus from his multiple car crash.
To be fair, the bad headlines for Muller have faded in the last few days. National have achieved this by removing their leader from sight. He's become un-Googled.
Invisibility is a bold strategy for an exciting new leader. It'll be tough to avoid all media questions until the election, but it may be his best option.
Lol…yep very likely so…however as Chris Trotter noted in a recent article the fact Simon is gone will likely be enough to bring many back to the fold no matter how poorly Todd performs….I suspect he will prove to be correct, to a certain extent
It had occurred to me that JobStart referred to Muller’s new role as Leader of National 😉
The long weekend has given him three days of breathing space. Coming week will be telling; I’m sure Muller and his team of talent have had a busy three days.
This does look more like socialism for the rich, and capitalism for the poor. It's an irony which leaves a sickening taste in the mouth. Funny how the right wing are so into socialism when it's for their direct benefit.
The Taxpayers’ Onion doesn’t like it. The BFD doesn’t like it.
Dan Bidois' announcement was not well timed, boringly last century, and contradictory to the JobsStart policy. I remember a similar argument when they introduced the 90 day trial period with Paula Bennett who insisted it would apply to new starts coming off the benefit. I think she backed down in the end. Dan Bidois is an unfortunate pick for National and an easy target. After all, he is the man who said he wants to see unions gone.
I think National is using its MPs as pawns in a game of political chess. When Bidois or Maureen Pugh come up with those press releases, social media messages, and what have you, I think they act on instruction, and not off their own bat. It is a Borg Collective. Occasionally, one engages their own brain and inevitably regrets it 😉 This is the Party of self-responsibility and personal choice, which is rather rudderless at the mo and has long lost its civil/moral compass.
The one election we have had where the incumbent govt's advantages are offset by vastly superior funding for the main opposition party's campaign activities but the Nats are too rudderless to put up a decent fight.
Indeed, and my worry is that if they can’t put a decent fight they might resort to a dirty one.
With Fieldmarshall Brownlee in charge what could possibly go wrong..
Bidois is anti union, the Nats very DNA is Union busting, and worker suppression–think Massey’s “Cossacks” and Holland’s ’51 waterfront lockout. Compliant workers brimming with fear and loathing are easier to manipulate and discard with no obligation–that is what the old 90s buzz term “labour flexibility” really meant. And it is exactly what 90 day fire at will is all about.
The original iteration of “sack ’em on day 89” was never even properly monitored by the appropriate departments from the outset! Treasury did say something as alluded to above.
The Employment Contracts Act 1991–NZ National Party all the way–was the end of wide spread collective coverage for NZ workers. Working class families have felt the impact ever since, and in 2020 we need to improve the situation not adopt reactionary measures.
It encourages employers to be dumber than necessarily required to hire staff, and run a business anywhere except into the ground while churning staff as quickly as running a tap. Just like the 90 Day law always did. No risk, no cost, no stake in the game, opportunity to take all the rewards and none of the cost, no real need for the employer to learn anything from their failure, and no need to say anything truthful about anything during what is now a non-existent interview process, but everything done in total "good faith".
No intelligent person would hire an employee who publicly announced, over and over, they had no intention of fulfilling their responsibilities. Yet we are allowing employers to do this, and arguing it might work? Where is the crisis? Where exactly is the crisis that requires this deadly cure?
In five years from now the majority of employers will be even dumber than they are now, helped along by their own greed, and a criminally insane government. This same government will be at a total loss to understand how things went wrong, except to blame the opposition, whoever they are, while only ever accelerating the destruction of yet another social pillar that generally speaking stops nations falling into wholesale poverty – in this case, stable and permanent employment in meaningful jobs. A future worth voting for I'm sure, as long as your rental property gets that new kitchen in before Christmas.
I'm baffled as to why you would put a cap on the number of jobs.
I think this is so that they can manage and budget for it. No Government writes out blank cheques because it would lose control of its finances. That said, I don’t think National has done its homework on this policy. Muller needed something positive to end the week with.
This whole commentary reads like the minutes of an economists meeting.
If all the economists in the world were laid end to end they would not, still, reach a conclusion.
(My apologies to GB Shaw for the misquote, it is close enough.)
Again, just for you:
Quiz: Who said this?
A. An economist
B. A politician
E. Don’t Know
National Party – an enigma that Turing couldn't break. In- something, I can't think of the word. I've got it – Incontinent!
A bit of fun and frivolity: Bet they are too flat-footed to dance the Continent-al. A different sort of in-continent.