Firms in New Zealand ask for cheaper unemployment insurance scheme

Firms in New Zealand are asking the government for a cheaper, redundancy-only unemployment scheme. 

The government has proposed a compulsory national income insurance scheme which would replace 80% of a workers’ income, up to a cap of NZ$130,911 (US$86,737), for a maximum period of six months. This would cover scenarios in which staff should involuntarily leave their jobs.

Under the proposed scheme, employers would be required to pay a “bridging payment” for the first four weeks following the worker’s retrenchment. 

However, the scheme has been criticised as being too expensive for businesses, which is estimated to cost NZ$3.54​ billion (US$2.35 billion) a year. It would come at a cost of roughly 2.77% of workers’ income, with half being taken from their pay packets, and half borne by employers, according to Stuff.

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The government has estimated that of the total cost, some NZ$1.81 b​illion (US$1.2 billion) would pay for redundancy cover, and NZ$1.73 billion (US$1.15 billion) would cover the loss of work due to health and disability claims.