The Government's plan to pay workers at risk of redundancy a $60 per fortnight wage subsidy is disappointing and would need 'substantial' top ups from employers if it was to work, a union said today.

Prime Minister John Key today announced the Government would pay some workers $12.50 an hour for up to five hours a fortnight, under a scheme aimed at keeping people in work.

Businesses would not be able to make any workers receiving the Government's payment redundant.

The Engineering, Printing and Manufacturing Union said the pay out was "underwhelming".

"Unless employers are willing to meet this subsidy with a substantial top-up of their own it's unlikely to be accepted by workers," national secretary Andrew Little said.

"As far as the EPMU is concerned, this will be a bottom line."

The 'Job Support Scheme' will initially only be available to workers at private sector businesses employing 100 or more full-time staff.

Employers, workers and unions would negotiate voluntary agreements to reduce their work hours. For those who agreed to a nine-day fortnight the Government would pay out $12.50 an hour to a maximum of $60.

The amount matches the minimum wage, which is set to increase from $12 on April 1.

Mr Little said the amount was "miserable".

"Five hours at the minimum wage is a miserable level of subsidy for a day's lost pay and our members simply won't wear that sort of loss."

CTU backs scheme

However, the Council of Trade Unions welcomed the announcement, saying the union's members wanted to protect employment and the package provided "a real basis for business and unions to work to save jobs".

"We will always advocate that the package could have included a higher rate of pay. But the government contribution was essential to make this idea acceptable to workers," CTU president Helen Kelly said.

"We expect responsible employers, who will also benefit from this scheme in terms of retained staff, and reduced costs associated with redundancy, to also make a contribution to the lost wages, since clearly there are benefits for businesses that do this."

John Key said the scheme was "a practical measure that will give businesses some extra time to ride out the tough conditions, and to retain jobs as they do".

"We need to be realistic, however - there will be redundancies and this is not a silver bullet," he said.

Further work would be done to see if the scheme could be extended to smaller workplaces, but Mr Key said unions had pressed the Government to act urgently.

He also said the original plan to link the scheme to training had proved too difficult.

While the Government hoped training would be offered and taken up it would not be a compulsory requirement.

The EPMU said free training on the tenth day of a working fornight had been a core part of the iniative outlined at the Job summit and it was disappointing it had been abandoned.

Who qualifies?

There are around 1600 companies employing 580,000 people who would qualify for the scheme.

It will begin on March 27 and run through until the end of 2010, but only for up to six months within those dates.

The Government's contribution of $60 a day for each worker would be paid directly to employers to hand on to employees who have negotiated a voluntary agreement to reduce work hours.

The scheme will only be available for up to 10 employees for each threatened redundancy.

A rough "back of the envelope" estimate was that the scheme would be picked up by between 20,000 and 25,000 workers.

This would mean saving around 2000 to 2500 jobs at a cost of $16 million to $20 million.

More details of the scheme will be discussed at Cabinet next Monday.


The nine-day fortnight was one of the headline suggestions to come from last month's Job Summit, when the Government, unions and business leaders got together in Auckland to look for ways to help the country get through the recession.

The proposal was popular with both unions and employers as a way to save jobs in distressed companies.

At the time, John Key ruled out full Government funding of 100 per cent of employees' wages for the 10th day each fortnight, and unions and employers disagreed about who should bear the rest of the cost.

Cabinet had "extensive discussions" about the initiative when it met on Monday, Mr Key said yesterday.

He indicated the Crown would consider some allowance for workers. Finance Minister Bill English had previously said the Government's books were in bad shape and there was limited money available for the scheme, or any other.