Employers quick to take up $5000 youth subsidies

Employers are rushing to gain new $5000 subsidies for young workers, raising fears that the scheme's 4000 jobs will be filled well before it finishes at the end of next year.

Work and Income said 319 employers offered 414 jobs under the Job Ops scheme in the first two weeks after Prime Minister John Key unveiled it at the National Party conference on August 2.

But the initial data suggests that many of the jobs would have been created anyway without the subsidy.

Job Ops provides $3000 upfront, and $2000 after six months, to any employer who takes on a worker under 25 in an "entry-level" job.

In one of the first cases in Auckland, Pakuranga wall art company Crystal Ashley has employed 22-year-old hospitality graduate Derwin Randle to operate a cutting machine for 40 hours a week at the minimum wage of $12.50 an hour.

The $5000 subsidy will pay 38 per cent of his $13,000 wages over the next six months.

But the company's directors, Nandar Thwin and David Tan, said they would have employed an extra person within a few weeks anyway.

"If it wasn't for the subsidy we would have employed someone by the next two weeks," said Mr Tan.

In another case, Bernadette Perana of Bernie's Gas'n'Gobble cafe in Te Kuiti said she needed to hire one person to replace someone who left, but because of the scheme hired two for the price of one.

Both workers, aged 18 and 20, have been hired for 30 hours a week at the minimum wage, earning $375 a week or $9750 each over six months. The $5000 subsidies for each worker will pay just over half the cost.

The second person will allow Ms Perana to spend more time with her 3-week-old baby. Without the subsidy, she said, she would have hired only one person and rearranged other staff shifts.

Employers and Manufacturers Association chief executive Alasdair Thompson said logically most employers who took up the subsidy would have hired new workers anyway.

"Most people are not going to hire someone for something they don't need," he said.

He said the Government should have tackled the real causes of high youth unemployment - a high youth minimum wage and an education system that allowed a fifth of young people to leave school without basic literacy and numeracy.

However, Council of Trade Unions secretary Peter Conway said unions supported the scheme and wanted it extended to all ages.

Mr Conway and CTU president Helen Kelly met Social Development Minister Paula Bennett yesterday and agreed that officials would work with the unions to ensure that subsidised jobs did not simply replace unsubsidised ones.

Work and Income acting head Mike Smith said both Crystal Ashley and Bernie's Gas'n'Gobble had assured staff that they would not have hired anyone without the Job Ops subsidy.

"We have since strengthened the guidance for staff when looking at applications. Now staff will ask whether the employer was planning to fill the position anyway," he said.

Auckland University economist Professor Tim Maloney said the Government was "going down the right path" by targeting young people, who faced the biggest hurdles getting a first job.

"It's just a question of whether it's set up in the right way," he said.

Alicia Taylor, 18, who started at Bernie's Gas'n'Gobble two weeks ago, said she had done "courses and courses" since leaving school at 15, most recently a hairdressing course, but the shift work at Bernie's was her first fulltime job.

"I don't mind the hours, I don't really do much with my life anyway," she said.

"I was planning to go back and do the rest of my course next year, but I think I might give that a miss and just keep working for a while and go part-time and do the hairdressing the year after next."

A HAND UP

$5000 subsidy to employ young person in an entry-level job for six months.

Young person must be 16 or 17, or 18 to 24 on the unemployment benefit.

Young person must be paid at least $12.50 an hour for at least 30 hours a week.

Job must not replace current roles or roles lost to redundancy.

ON THE WEB

www.workandincome.govt.nz/business/a-z-services/job-ops.html


Employer line: 0800 778 008