NZ can do more to help redundant workers - OECD

Jobseeker Ian, who is too embarrassed to make his surname public, advertising for a job on the Petone foreshore in April last year. Photo / Mark Mitchell

New Zealand can do more to help workers struggling after redundancy, according to the OECD.

A new report, Back to Work New Zealand - Improving the re-employment prospects of displaced workers, found 1.1 per cent, or 29,000 New Zealanders, of working age had been made redundant in the last five years and had still not found a new job.

The report, which was prepared by Veerle Miranda from the OECD's Employment, Labour and Social Affairs Directorate and Simon Chapple from the University of Otago, showed New Zealand performed better than many other OECD countries, but could still improve.

"This share is lower than in the 1990s but higher than 10 years ago," it said. "Most redundant workers find employment again although one in six is unable to find work."

Of those that managed to find new employment, most tended to earn less, work shorter hours and have fewer benefits than in their previous roles.

According to the data, the risk of redundancy in New Zealand used to be one of the lowest amongst the 35 countries in the OECD, however the impact of the global financial crisis had affected the country significantly, lifting this risk in 2008 and 2009.

Although new jobs are created regularly, around 15 per cent of all jobs are ended each quarter according to the report.

With an unemployment rate of 5.1 per cent in the second quarter of 2016, and redundancy risk not yet returned to pre-crisis levels, New Zealand is no longer among the best performing countries in the OECD.

"The long-term impact on wages is also stronger than in other OECD countries," the report said. "Even three years after redundancy, personal income is about 20 per cent lower for workers in a new job compared to their peers who stayed in work."

This was compared to almost no wage effects in Germany and the UK and a loss of 6 per cent in the US and Portugal. Although these wage losses were offset by redundancy payments in the first year, wage losses were significant in following years.

The report's authors said in order to reduce the costs of economic restructuring for workers and their families, the government could consider how its support framework could be improved.

"Even in good economic times, many displaced workers need job-search support," they said. "Policies should seek to better identify these workers and help them finding a suitably-matched job, if needed in collaboration with private employment services."

Current public policies were focused on helping people that had been unemployed for a long time the report said, whereas workers that had been made redundant were, to a large extent, left on their own to find a new job.

From this research, the report made a number of recommendations for New Zealand employers and the government. Although there was some income support for workers this did not cover all staff.

Putting added responsibility on the employer for workers being made redundant was suggested, as well as implementing a minimum statutory notice period with an online notification system for workers and penalties for non-compliance.

Contacting these workers early on and expanding employment services for skilled workers was recommended as well as providing incentives for public employment services to assist people that were not eligible for income support.

The report also recommended introducing an active redundancy insurance scheme which would replace voluntary redundancy payments. This would combine financial support with pro-active support to help with the transition between jobs. The report suggested also covering all workers, irrespective of their individual working arrangements financed through a payroll-based levy.

The report said while New Zealand had a support framework in place, this could be improved.