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Wage support measures worth examining

"A wage support mechanism should be included among the new measures being investigated in response to the escalating impacts of the COVID-19 pandemic, as Australia's governments weigh the advantages, and disadvantages, of such actions already taken in other countries," Innes Willox, Chief Executive of the national employer association Ai Group, said today.

"To cushion the broader impacts of the virus, a common goal in Australia and other countries is to keep businesses operating, reduce job losses and maintain supply.

"One proposal that has gained considerable attention is the UK wage subsidy measure. New Zealand is also putting a wage subsidy scheme into place. There are other options too.

"The UK measure is available to workers temporarily stood down from work. It is capped at an equivalent of $A5,000 per month. Under the scheme employers are encouraged to pay stood down workers 80% of their usual wage up to the $5,000 maximum. The employer will be repaid for the amounts paid to its stood down workers.

"This is not directly transferrable to Australia where the Federal Government has already announced that stood down workers are eligible for the new Jobseeker payment plus the Coronavirus Supplement for the next six months.

"For a single employee with no children this is equivalent to just over $2,400 per month and considerably more than this for families with children. Unlike the UK measure, the Australian Coronavirus payment is also available to people who are unemployed (not just for those stood down).

"In considering the UK wage subsidy arrangement, the Federal Government should weigh the advantages of the UK measure for stood down workers. These include maintaining a valuable connection between employers and their employees. Its disadvantages include the question of equity, with people who are stood down potentially receiving a greater benefit than those who are unemployed.

"The New Zealand wage subsidy is more in line with an Australian approach to redistribution. It is more broadly available than the UK measure with the New Zealand support also available for people remaining in employment in a stressed business.

"The Kiwi subsidy is confined to stressed businesses and is less generous for stood down workers than in the UK. The NZ scheme enlists the support of the employer to make up the difference between the level of subsidy and the 80% of salary for continuing employees.

"In considering either the UK or NZ approach, the Australian Government would need to work out how an additional scheme would mesh with the existing domestic Coronavirus Supplement.

"Further consideration should also be given to complementary approaches to household support. Amongst these is the proposal for the Government to arrange zero interest loans that don't start being repaid until a level of income is reached.

"Other further incentives to retain workers can also be built into the existing Australian approach. The upper limit of the PAYG measure could be raised and the measure could be extended to the many stressed Australian businesses turning over more than $50 million a year," Mr Willox said.

Media enquiries: Tony Melville – 0419 190 347