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Productivity Commission Report Shows Need for Income Insurance at Redundancy

“New Zealand workers have some of the lowest levels of redundancy protection in the world” Richard Wagstaff highlights the necessity of income insurance, in response to the latest Productivity Commission report showing that only 50% of laid-off workers secure new jobs immediately.

The Productivity Commission report released today on the impact that redundancy has on New Zealand workers shows the need for the protection that income insurance provides, said CTU President Richard Wagstaff.

The report, using a detailed study of Aotearoa New Zealand workers involuntarily laid off, shows only 50 per cent of displaced workers find new jobs immediately after layoff and only two-thirds find new jobs within six months.

“New Zealand workers are among those with the lowest levels of redundancy protection in the world, with protection levels just below those of Paraguay and Colombia,” said Wagstaff.

“The tripartite work to address this problem through an income insurance scheme was stopped by the new Government, despite rising unemployment and the likelihood of greater supply chain disruption in the future.

“As New Zealand deals with a challenging global economy, now should be the time to give workers more income and economic security – rather than less. Social Insurance would have given workers the security that is commonplace in successful economies overseas.

“The research also showed that the “earnings of workers who find new employment take almost three years to return to pre-layoff levels”. This backs previous findings from the OECD which showed that New Zealand workers faced a much higher wage scarring than workers elsewhere in the world.

“With the Government cancelling social insurance, bringing back 90-day trials, ending Fair Pay Agreements, and cutting the minimum wage and welfare in real terms, they seemed to determined to reduce security rather than increase it,” said Wagstaff.