Wednesday, March 18, 2020

Stuff from a small town in New Zealand

From the hinterland, the back blocks of rural heartland, one of my favourite commentators and artists Mark Wahlberg has started a blog Inside Pahiatua looking Out. We aren't overly blessed with views directly from and about small towns in New Zealand. Especially not of this nature. Linking to it in 'blogs I read'.

Tuesday, March 17, 2020

It is desirable to close the margin between benefit and employment income

Oh wait. Did I get that right?

Here's a quote I used recently when opposing the linking of benefits to wage inflation:

 " is desirable to create a margin between being dependent on a benefit and being in employment....
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
Yes NZ is facing an economic crisis. But I fear government response will make it worse.

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.