Good to see polytech sector step up

March 23rd, 2009 at 11:00 am by David Farrar

NZPA reports:

Aoraki Polytechnic, Eastern Institute of Technology, Otago Polytechnic, the Open Polytechnic and Wellington Institute of Technology also announced yesterday they would offer free or low-cost training to those affected.

It will not be compulsory to take up training. …

He [John Key] welcomed the polytechs’ offer of free or cheap training, saying making it compulsory would have been too difficult, but he encouraged employees to lift their skills.

Institutes of Technology and Polytechnics (ITPs) New Zealand executive director Dave Guerin said the institutions were happy to be able to sweeten the deal for employers and employees considering the nine-day fortnight.

Mr Guerin asked ITP NZ members for proposals on March 12 and had five responses within 24 hours. More ITPs were expected to join in.

“ITPs will offer courses within existing funding, using programmes that have already been developed and approved,” he said.

I agree that making it compulory would have been a bureaucratic nightmare. Instead we have the polytechnics making it easy. A good initiative.


March 11th, 2009 at 7:00 pm by David Farrar

I know the “subsidy” by the Government (taxpayers) is not at much as some would want, but that doesn’t excuse this stupidity by Labour Party President EPMU National Secretary Andrew Little:

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.”

This staggers me. Andrew is saying that employers should pay employees more money to work less hours as a way to stop businesses going broke and/or having to lay staff off.

If your staff hours reduce by 10% yet your staff costs only decrease 5%, the company is arguably in a worse position – they have lower productivity as they are effectively now paying a higher hourly rate.

Luckily the CTU is being more rational:

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.

The CTU does also say they would like employers to contribute:

“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.”

But the difference in tone and substance is significant. The EPMU is saying they will have nothing to do with the scheme unless employers pay staff to not turn up to work. They say it is a bottom line.

The CTU far more rationally says “Hey this is a good scheme, we would like employers to contribute, and think it benefits them to do so”.

Anyway the EPMU has made itself clear. Any site where they represent workers should be prepared for big job losses, as they won’t co-operate with helping save jobs.

This is one of those situations where people might ask what hat is Andrew wearing when he condemns the scheme, as oppossed to the CTU that welcomed it?

Details announced for nine day fortnights

March 11th, 2009 at 1:30 pm by David Farrar

John Key has announced details of the nine day fortnight plan to help struggling businesses:

  • Available to 1,600 businesses with more than 100 employees. Those businesses employ 580,000 people.
  • Available from March 27, 2009 through until December 31, 2010 – but only for up to a six month period within these dates.
  • Government’s contribution of five hours at $12.50 will be paid direct to employers to give to the workers it has negotiated a voluntary agreement with to reduce work hours to a nine-day fortnight.
  • Will be available to up to 10 employees for each averted redundancy.
  • Will apply to employees who have been full-time for the two months preceding going into the scheme.
  • Is anticipated to be picked up by between 20,000 and 25,000 workers, making the approximate cost $16 million to $20 million.

I am glad it is targeted and temporary. To some degree this is the Government paying in a bit of money, to allow employers, unions and workers to negotiate some reductions in hours to prevent redundancies. This is a useful reminder of how important flexibility in the labour market is.

If someone earns $30,000 a year and they drop down to nine days a fortnight, then their gross wages will drop from $1,151 to $1,036 a fortnight.  That is a drop of $115 a fortnight. The Government’s subsidy will give them back $63 a fortnight leaving them with a gross income drop of $52 a fortnight. So at $30,000 the Government picks up 54% of your day off, and you pick up 46% and you are guaranteed not to be made redundant.

$52 a fortnight is still a reasonable drop in income. But hey it is less than what the ACC levies were looking to rise under Labour!

What will be interesting is the impact of Working for Families. One of the problems of WFF is the abatement rates for it plus the accomodation supplement means that effective marginal tax rates get close to 90%. So certain families could have the main incoem earner go from $50,000 to $70,000 yet only have net income increase by $1,200 or so (figures off memory). Not that is a very bad thing, but for once it may work in favour of some families – if your income drops by going into a nine day fortnight, then the abatement rates will work in negative and may keep you at close to your old net income.

The Government should get IRD and WINZ to do a online calculator tool where people can work out what happens to their net income if they go onto a nine day fortnight.