Shane Te Pou: Why we should the get behind the Social Unemployment Insurance scheme

OPINION:

Nobody designs it that way, but sometimes bureaucratic systems produce cruel outcomes. I’m seeing that play out in my whānau today. A relative has been tragically struck with a diagnosis of incurable cancer. Because she can’t continue working, the system we have requires a stand-down period before she can access help from the state in the form of the subsistence-only sickness benefit. In her case, luckily, even with moko in her care, she will get through financially. But many others aren’t as fortunate and are forced to deal with economic distress at the worst imaginable time in their lives, through absolutely no fault of their own.

This episode highlighted to me how important it is for Aotearoa New Zealand to get behind Labour’s most ambitious and far-sighted reform to date: the Social Unemployment Insurance scheme.

The media coverage you would generally expect from Grant Robertson’s announcement of the scheme was blunted by justifiable national focus on the Omicron threat. But it’s worth spelling out what the new scheme entails, and why it represents a vast improvement over what we have now.

The gist of it is as follows. As long as you’ve been in the workforce for six months (even if with more than one employer over that time), you will receive 80 per cent of your income for up to seven months in the event of redundancy or any other form of “no fault” job loss. This can also apply to people with a severe medical condition (defined as requiring more than four weeks off work). Aside from full-time employees, the scheme also covers contractors and casual staff.

The scheme will be administered by ACC and will include wraparound services, including training and rehabilitation. (It may cover workers for up to 12 months if they are enrolled in an approved training programme.)

Now I’ve heard some call this “middle-class welfare” that will mostly help the better off, so I put that to CTU economist and reform advocate Craig Renney. He came armed for rebuttal.

“The official data on redundancies,” he explained over email, “shows that lower-income workers are more likely to be laid off than other workers. Across a two-year period, nearly 60 per cent of redundancies occurred to workers earning less than $48,000 a year.

“In the decade to 2020, nearly 100,000 Māori were made redundant. A further 50,000 Māori left their job due to ill health.

“Across the same period nearly 150,000 workers with children were made redundant, and at least 60,000 workers with children left their job due to ill health”.

The scheme will be funded through a levy on salaries set at 1.39 per cent, shared between employers and employees, and overseen by an independent entity comprising representatives of business, unions and Māori. This approach inoculates the scheme and guarantees the protections it offers from the prying hands of future governments. The UK scheme, which is funded from general revenue and overseen by elected politicians, has predictably been a disaster.

“We saw what National did to the welfare state during its last nine years in office,” Renney reminded me, “making a separate fund gives the scheme more control over its future.”

This scheme is not a welfare programme. It is an overdue recognition of what Kiwis’ careers have come to look like over the past three or four decades. Far fewer of us will get through our working lives without facing the economic shock of sudden periods of unemployment. Rather than extinguishing our lifestyles overnight by forcing us on to the jobseeker pittance, it provides financial and other forms of support to transition to your next role without putting your next mortgage payment or power bill in peril. It upholds the dignity of work while recognising the rapidly changing nature of the workplace.

For some of my progressive friends who have doubts about the scheme, I urge you to look at that data and you’ll see it’s women, young people, Māori and Pasifika who bear the brunt of redundancies and who will therefore benefit most from the scheme. And if you cast your eyes offshore, you’ll see that countries operating this or like models of social insurance that report the lowest rates of inequality.

None of this means we don’t need to tackle the inadequacy of our benefits system, just that it’s a totally separate issue. Of course, current benefits are shamefully low, forcing children to endure living conditions we simply should not tolerate in Aotearoa.

Aside from its many policy merits and economic justifications, Social Unemployment Insurance is, above all, a humane approach that gives people a chance to navigate life’s ups and downs without the indignity of stand-down periods and poverty handouts.

That’s why I keep thinking of this in the context of my whānau member facing up to her unspeakable disease. We pray that what time remains is full to bursting with love and laughter – and that the dignity with which she lived every minute of her life is honoured in full measure respecting a great life lead.

• Shane Te Pou (Ngāi Tūhoe) is a company director at Mega Ltd, a commentator and blogger and a former Labour Party activist.

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