Tuesday, September 15, 2009

Subsidies will always be abused

Paula Bennett is impressed with 1,000 new subsidised jobs created after potential employers were offered $5,000 to employ a young person for six months. While I fully support the sentiment behind getting young people into jobs, distorting the value of their labour with subsidies is probably not the answer.

The rules for the Job Ops scheme were tightened after initial publicity last month about a rush of employers seeking the subsidy. The criteria now state that jobs must be "opportunities that wouldn't exist if the Job Ops subsidy wasn't available".

What a nonsense. There is no test of proof. For instance, it could be argued that a employer had previously advertised the position without subsidy. But the employer could counter, possibly truthfully, that he had changed his mind about offering a position due to the recession. Then he had changed it back when the subsidy became available. Or it could be argued that a young person is employed alongside others doing the same work unsubsidised. The employer could argue that he purposely produced one extra job that he couldn't have without the subsidy.

Whether the opportunities would or wouldn't exist without subsidy will only become evident after the subsidy runs out. Hopefully, by then, at least some of those employed will have proved themselves to be worth it.

1 comment:

Anonymous said...

Easy way to cancel out the spending. Claytons subsidy and has immediately resiled from the stated intention which was to get young people into training.
It was poorly thought out and was never going to work.

My comments at the time.

I happen to consider that we should train young people in the work force. There are a lot of young people who do not fit in school, especially boys, boys who can go onto become very capable members of the community.(Girls also).
The issue of minimum rates is a minor irritant to the process although it is really a bit high. No one is going to change that although some thought should be given to it. Apprentices used to have a graduated scale which often left them earning less than a non apprentice of the same age doing the same work. Neither right nor fair but upheld by the unions.

This scheme of Keys in my opinion will be a waste of time. It will save money by the lack of take up and here's why.
Most of NZ business are small with less than 5 people. Now if we look at a tradies workshop say of two or three then at this present time they are working hard out to pay their way and earn a surplus of income for the owner. Now given a tradie is charged out around $60-$70 per hour, if he has to stop his work to supervise an untrained person then they are losing money,quickly. 30 minutes of lost time a day is $30 less charged out plus the added wage and other expenses like holiday pay, uniforms etc etc for the trainee. Not to mention the mistakes and waste they can create.
The subsidy being offered amounts to $192 per week but at $12.50 for 40 hours the basic wage content is $500 so the employer is out of pocket $308 plus his tradies lost charge out time plus plus plus.
No business in these times is going to even think about this, its rubbish because businesses are not the social welfare dept.

IMHO a better solution would be to do this;
Assuming an employer can find a suitable person then a list of agreed skills to be taught be agreed,(and this does not have to be long nor detailed but at least a commitment to some skills) then the Govt. should pay all the wages for the first month up to the 40 hour minimum wage, including acc and Holiday pay. Each succeeding month the amount paid should be reduced by 20% so that at 6 months no further allowance.
By that time a trainee should be reasonably useful at which point each party can make a decision on the future.
By doing this the employee and the employer are under an obligation to actually do skills training. Something that appears to be lacking with the suggested scheme. There is maximum subsidy for lessor skill level reducing so that the trainee actually costs the trainer more as time goes along, meaning he is penalized if he doesn't train.

It seems rather incongruous to me that a person can toddle of to uni and get an interest free loan and a student loan to learn but a person with no desire to go to uni gets beaten up before they get any assistance with any other form of learning. Surely a business training a tradesman is as valuable as a uni lecturer. Now I know that's right wing propaganda to the left but its none the less correct, just means they can't have their brain taken over which is why they didn't fit in school in the first place.

Its interesting to note that the Australians have always placed an emphasis on trade training with very big trade training schools in the main centers. We have almost abolished ours.
So do I think Keys training scheme will amount to much. NO.

Apologies for the long post