Government releases details of Flexi-wage subsidy expansion

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The government has announced an expansion to the Flexi-wage scheme, with applications accepted from next week.

Prime Minister Jacinda Ardern at the flexi wage announcement. 11 February 2021.

Prime Minister Jacinda Ardern. Photo: RNZ / Dan Cook

The changes increase the average amount a business can access to hire a worker, and scale up the number of out-of-work New Zealanders the scheme will reach.

Firms can now receive an average of $7500 per employee, depending on individual circumstances.

The government said the changes would support up to 40,000 more New Zealanders into work.

Prime Minister Jacinda Ardern had said last year the scheme was a priority to roll out by Christmas.

“Flexi-wage is an important plank of our economic recovery plan,” Jacinda Ardern said in a statement. “The expansion of it is expected to help thousands more New Zealanders into employment.”

The announcement includes a ringfenced $30 million self-employment component, and covers increased support through training and mentoring for those out of work wishing to start their own business.

Minister for Social Development and Employment Carmel Sepuloni at the flexi wage announcement. 11 February 2021.

Minister for Social Development Carmel Sepuloni. Photo: RNZ / Dan Cook

The Ministry of Social Development (MSD), which leads the programme, will begin taking applications for the expanded programme on Monday.

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Through the existing scheme, 40,167 Flexi-wage subsidies were approved between 1 July 2014 and 30 June 2020.

Flexi-wage is also available to help with training or in-work support that a person may need to do that job, as long as the job continues after the scheme has finished.

“The Flexi-wage expansion gives employers confidence to take on and train people, knowing the person will be supported until they’re equipped and ready to meet the requirements of the job,” Minister for Social Development and Employment Carmel Sepuloni said.

What has changed

Eligibility has been widened from helping job seekers on a benefit and at risk of long-term unemployment to now include job seekers disadvantaged in the labour market who may not necessarily be receiving a benefit.

There will also now be set rates, which the government says is to to provide certainty to businesses looking for staff.

The length of time the Flexi-wage can be paid depends on how much support a person needs to get the necessary skills and training.

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Flexi-wage may be paid for 24 weeks at $276 per week, totalling $6624 (GST inclusive), or 36 weeks at $276 per week, totalling $9936 (GST inclusive). Both these rates are $240 per week before GST. There is also a discretionary rate depending on the amount of support a person with complex needs will need to get a job and stay employed.

Overall, the average payment is estimated to be $7500 across 40,000 placements, which is higher than the previous average.

The self-employment payments would be $600 a week over 28 weeks, totalling $16,800, pro-rated for those pursuing self-employment part-time.

Under the scheme there would be increased funding support through a Business, Training and Advice Grant of up to $5000.

BusinessNZ Chief Executive Kirk Hope said the scheme expansion would boost business confidence.

“Flexi-wage will incentivise businesses to take on new workers and is targeted at Kiwis struggling to re-enter the workforce, including those who lost their jobs due to Covid. This should keep unemployment numbers low and the economy ticking over.”

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Hope said the $30m ringfenced to help people start their own business was “a constructive way to encourage new start-ups and innovation”.

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