Here's a quote I used recently when opposing the linking of benefits to wage inflation:
"...it is desirable to create a margin between being dependent on a benefit and being in employment....Yes NZ is facing an economic crisis. But I fear government response will make it worse.
The Labour Party isn’t the party that says living on a benefit is a preferred lifestyle. Its position has always been that the benefit system is a safety net for those who are unavoidably unable to participate in employment. From its history, the Labour Party has always been about people in employment."
Michael Cullen, 2008
Wage subsidies come with the proviso that the employer pays the employee a minimum of 80 percent of his existing wages. So the employee will be taking a 20 percent cut in income.
At the same time the beneficiary will be getting an 11-17 percent increase in the Jobseeker rate (plus any annual increase for wage inflation and the winter energy payment).
Lifting benefits when wages are heading south seems particularly foolhardy. I am seriously worried that we may see a repeat of the early nineties when benefit dependency reached 16 percent and large numbers of unemployed never worked again with many migrating to sickness and invalid benefits.
God forbid.
2 comments:
Which if I recall lead to Ruth Richarsons Mother of All Budgets. Trying to force bennies back in to the workforce..
Which caused, in part, the migration onto the better paying invalid benefit or their partners to abandon them for the DPB. Then IRR came along and meant earning more made your rent less affordable. And the CS Act of 1991 meant earning more increased your child support liabilities. Benefits trap people because when either the rate goes up and/or earnings disregard goes down, working more or working at all gets penalised.
Post a Comment