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Are wage subsidies just “delaying the inevitable”?

New Zealand’s major hotel groups have welcomed the lifting of a $150,000 cap on wage subsidies flowing to employers for the next month, but a leading tourism body says it’s not enough.

The government has extended its stimulus support to cover the wages of large businesses with several staff, increasing the expected cost of the scheme from $5.1 billion to $9.3 billion and covering all businesses whose workers are in non-essential jobs or not able to work from home.

While the subsidies provide some relief, peak body Tourism Industry Aotearoa says New Zealand’s wage subsidy scheme is just “delaying the inevitable” for many businesses.

Chief executive Chris Roberts is pushing for a more long-term jobs furlough scheme, like the UK’s Coronavirus Job Retention Scheme, which will allow businesses to keep staff on the books so businesses can rebound quickly once the coronavirus crisis abates.

“Tourism businesses across New Zealand have no customers, no revenue and no choice but to send their loyal staff home,” says.

 “Every business I have spoken to wants to survive this crisis, but they need to go into ‘hibernation’ – cutting costs to a minimum while protecting their key assets, which includes their staff.

“There will come a time to start the recovery, and tourism operators will need their staff available and ready to get back to work. Those staff need to be able to feed their families in the meantime.”

Scenic Hotels Group, which has an annual wage bill of $30 million and employs 900 staff across the country, welcomed this week’s subsidy extension but general manager Brendan Taylor has also questioned what happens when the month is up.

Describing the cap lift as a huge relief which gives the group “another four weeks to look after our teams” he added: “But the picture at the end of the four weeks is that most of the hotels will be empty”.

Chris Roberts is championing a furloughing scheme like that introduced in the UK, under which an employer can apply for a grant to cover 80 percent of the wages of staff who are furloughed and kept on payroll, rather than being laid off. The scheme is designed to run for an initial three-month period.

Roberts says New Zealand’s wage subsidy scheme is keeping some workers in jobs, but tens of thousands face redundancy.

 “The UK government has made some questionable health decisions but has come up with a sensible and well-structured support package to save businesses and jobs, and our government needs to at least match it,” he said.

Hotels meanwhile are bracing for the worst as the nation enters lockdown.

Scenic is just one of several major industry players signalling widespread job losses. Millennium and Copthorne managing director BK Chiu commented this week: “We will need to make some very difficult decisions about all of our operations and employees in the very near future, certainly over the coming weeks.

“There will be reduced hours, there will be job losses. We will engage with our employees at all of our hotels and our corporate offices and look to agree on viable options to retain as many jobs as possible and to ensure that we have a business to manage in the future when this crisis passes.”

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Kate Jackson

Kate Jackson is the editor of Accomnews. You can reach her at any time with questions or submissions: editorial@accomnews.co.nz

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