'Allowance' scheme for 9-day fortnight

BY TRACY WATKINS
Last updated 05:00 10/03/2009

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Workers in struggling businesses are tipped to receive a Government "allowance" to soften the blow of losing a day's pay under plans for a nine-day fortnight.

The Government will announce the details of its flagship jobs summit policy within days, and Prime Minister John Key has confirmed that while job subsidies are off the table, an allowance is possible.

The Government has ruled out a wage subsidy on the grounds of cost, but is considering an allowance based on a "benchmark", such as the average or minimum wage.

Government sources say a 100 per cent wage subsidy for the lost day's pay is too expensive and would send the wrong signals to business, which might see it as an opportunity to trim wage costs by getting the Government to pick up the tab.

It was also ruled out as unfair, because workers doing similar jobs but paid different rates by different workplaces would get different levels of compensation.

The call for a nine-day fortnight headed the list of "top 20" ideas generated by the Government's jobs summit last month.

It is aimed at easing wage pressures on struggling businesses during the recession and has won support from unions, though they insist that workers need to be compensated for lost pay, or the scheme will not work.

Affected workers would spend the 10th day of their working fortnight in training or education, paid for by the Government.

Officials have been working round the clock on details of the scheme as job losses accelerate because of the downturn.

But while a reduced working week to trim wage costs might work for some industries, Government sources say the scheme is unlikely to suit smaller businesses such as cafes and service stations.

It is more likely to apply to larger, unionised workplaces, such as manufacturing firms.

Mr Key charged Cabinet ministers yesterday with pushing through the jobs summit measures and announced that he would oversee the plan for a national cycleway from Cape Reinga to Bluff.

He confirmed, meanwhile, that tourism officials were working on proposals for the Government to subsidise long-haul airfares to New Zealand, but the work was still "in its infancy" and the Government was yet to decide to fund it.

The plan was put up alongside pleas for a $60 million boost to promoting New Zealand overseas as tourists stayed away.

Mr Key said the proposal was for the Government to put some money into a "contestable fund", open to all airlines, not just Air New Zealand. It would operate along the lines of Air NZ's "grab-a-seat" promotion.

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- © Fairfax NZ News

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