Flexi-wage subsidy to support up to 40,000 people into work

Q. What is Flexi-wage?
A. Flexi-wage is a wage subsidy programme, targeted to support people who are at risk of long-term unemployment and who are receiving a benefit into work.

Employers receive a subsidy to hire people who may require extra training or support, or who are likely to be hardest hit by the economic impacts of COVID-19.

It’s flexible, so businesses receive a subsidy based on the needs of the person being employed.
To respond to COVID-19, Labour will expand Flexi-wage’s criteria and boost the number of businesses able to receive the subsidy.

Q: How does Flexi-wage work?
A: It’s about connecting businesses with people who are looking for work.

If an employer would like to take on a new worker through Flexi-wage, they meet with the Ministry of Social Development to talk through their hiring plan and how the subsidy would make a difference for their business.

The Ministry identifies a jobseeker who is eligible for the Flexi-wage programme and could fit the role.

Together, the Ministry and employer decide how much the Flexi-wage subsidy will be, and how long it will be paid out for. This takes into account the jobseeker’s skills and experience, and how much training and support they will need to perform the role.

Q: Why are we expanding Flexi-wage?
A: While our strong health response has given us an economic head start, the global pandemic will continue to be a challenge.

We know our lowest paid and most insecure workers are often the people hardest hit by economic downturns.

Workers without formal training qualifications, people over 50, disabled people, and Māori and Pacific workers will disproportionately bear the brunt, as they are often in industries where job losses are most common and are the last industries to recover.
Labour believes we can help cushion the blow for these people with job training and support into work. Flexi-wage is just one way we’re doing this.

Q: Who is eligible to receive Flexi-wage?
A: The Flexi-wage programme is designed to support people who may face barriers finding work, or who are at risk of long-term unemployment.

For example, they may have limited skills or work experience, require on-the-job training, have low confidence, or face age or other discrimination. A person is eligible for the Flexi-wage subsidy if they are:

• a New Zealand citizen or permanent resident and ordinarily resident in New Zealand within New Zealand’s working age population, and
• are disadvantaged in the labour market, and
• are at risk of likelihood of long-term benefit receipt dependency, or
• are in a situation where the Regional Director or National Manager for a programme has decided that there is a need to provide assistance (in exceptional circumstances).

As the effect of COVID-19 continues to impact the New Zealand economy, more New Zealanders will need support to find work. As part of our policy we will expand the criteria so more New Zealand businesses can take advantage of the scheme.

Q. How will this keep our economy moving?
A. Thanks to New Zealand’s strong response to COVID-19, we now have an economic head start. However, we know the global pandemic will continue to be a challenge.

By expanding the Flexi-wage programme, we’re supporting the people likely to be hardest hit by the ongoing economic impact of COVID-19. It’s just one way we’re helping to cushion the blow, get people working and keep New Zealand moving.

Expanding Flexi-wage is only one part of our plan to keep New Zealand moving. Labour has also supported more New Zealanders into work and training through Mana in Mahi, Te Ara Mahi, free apprenticeships, and more places in Trades Academies.

Our Wage Subsidy Scheme has supported around 1.7 million workers and 250,000 businesses, while our Jobs for Nature Fund is creating 11,000 new jobs to protect our environment. This is alongside key investments in critical infrastructure, from upgrading roads, rail and hospitals to investing in shovel-ready community projects, that will create jobs right around New Zealand.

Q: How much will this cost?
A: Because the Ministry of Social Development and businesses work together to decide on a subsidy amount, the cost of Flexi-wage varies from case to case. However, the maximum amount a business can receive is $22,000.

Labour will increase the average subsidy to $7,500 for 40,000 places. In total, this will cost $311m, including $10m for extra administration required, and an additional $1m to ensure businesses are able to consider whether it is right for them.

Fewer businesses than forecast have required the Wage Subsidy Extension. This underspend allows Labour to invest in programmes like Flexi-wage while still meeting our fiscal plan.

Q: How do we know Flexi-wage is effective?
A: This programme has been proven to work.

70% of people who received a Flexi-wage subsidy between July 2018 and August 2019 were not on a benefit as at 22 September 2019.
Evaluations done by the Ministry of Social Development showed Flexi-wage had significant positive impacts, and generated $7 in benefits for every dollar invested.

We’re now expanding this proven programme to respond to the impacts of COVID-19.

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