Almost Half of New Zealand Workers in 2021 Received a Government Wage Subsidy

New Zealand Prime Minister Jacinda Ardern holds up information on COVID-19 alert levels during a press conference at Parliament in Wellington, New Zealand, on March 21, 2020. Hagen Hopkins/Getty Images

Almost half of New Zealand’s working population received at least one COVID-19 wage subsidy during the past two years, the Ardern government revealed in a new report.

Excluding sole traders, 47 percent of New Zealand’s labour force, or 1.2 million employees, received a wage subsidy in 2021, down from 62 percent in 2020.

However, more jobs received two or more subsidies in 2021, at 65 percent compared to 32 percent in the previous year.

Minister for Social Development and Employment Carmel Sepuloni said the report showed the scheme had served to “protect jobs and support businesses” that otherwise might have been lost.

“In general, patterns of 2021 wage subsidy distribution were similar to those in 2020 with jobs in some industries being more likely to need wage subsidies or multiple wage subsidies, especially the accommodation and food, and arts and recreation industries,” she said.

Almost four-in-five accommodation and food services industry jobs received at least one wage subsidy, while over half of wage subsidy receiving workers in the arts and recreation industry were given five or more subsidies.

Auckland, which spent more time under lockdown, had the highest proportion of subsidy supported jobs.

Younger employees also received more payments compared to older workers.

“Policies like the wage subsidy helped keep people in work, our benefit increases have supported those who are out of work and our investment in various job programmes to support people back into work have all made a difference,” Prime Minister Jacinda Ardern said in February.

A children's playground is shown closed in Auckland, New Zealand, on March 4, 2021. Phil Walter/Getty Images

Eric Crampton, the chief economist of the think tank New Zealand Initiative, told The Epoch Times that the wage subsidy had prevented many layoffs during the first lockdown in 2020, enabling firms to restart quickly after restrictions eased.

“The scheme was not perfect, but it cannot be faulted given the timeframe in which it was developed and implemented,” he said.

However, Crampton said the government failed to update the scheme in preparation for subsequent lockdowns, noting that it had become obvious some industries, such as tourism, would need to contract.

“Resurgences of the wage subsidy scheme, combined with leniency from the tax authority on getting tax bills paid on time ... also helped some ‘zombie’ firms to continue when shutting down could have made more sense,” he said.

James Graham, assistant professor at the University of Sydney and former senior economist at the Reserve Bank of New Zealand, told The Epoch Times that according to his research, the subsidies saved around 175,000 jobs from disappearing in 2020, or 6.5 percent of the labour force.

However, he said the scheme was “particularly costly” and questioned whether a similar number of jobs could have been saved at a lower cost.

“The government paid out around $14 billion in wage subsidies in 2020 (and more in 2021). This implies that it cost around $80,000 (US$50,000) for each job saved in 2020,” Graham said.

“The government might have spent less by boosting unemployment benefits and better targeted those immediately facing a risk of unemployment,” he added.