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NZ should do more to help workers after redundancy

6 April 2017

New Zealand should do more to help workers struggling after redundancy, says OECD

New Zealand should extend access to income support and introduce a longer minimum notice period for all workers to help disadvantaged laid-off workers find a new job and maintain their job quality and living standards, according to a new OECD report.

Back to Work: New Zealand says that 1.1% of people of working age in the country have been made redundant in the last 5 years and still not found a new job. This share is lower than in the 1990s but higher than ten years ago. Most redundant workers find employment again although one in six is unable to find work.

Many of those who are re-employed tend to earn less, work shorter hours and have fewer benefits than in their prior jobs. The long-term impact on wages is also stronger than in other OECD countries: even three years after redundancy, personal income is about 20% lower for workers in a new job compared to their peers who stayed in work.

Low-skilled workers are particularly at risk, finds the report. People with lower secondary education are twice as likely to be made redundant as people with a bachelor degree or more, and the shares among those with no qualification are three times higher.

With around 84% of workers finding a new job within two years of being made redundant, New Zealand performs better than many other OECD countries, as a result of its flexible labour market which allows firms to adjust their workforce in line with production demand.

To help vulnerable workers find good jobs quickly, the OECD recommends New Zealand:

• Strengthen employer responsibilities for laid-off workers through a minimum statutory notice period, with an online notification system and sanctions for non-compliance.

• Reach out more effectively to disadvantaged redundant workers by contacting them early on; by expanding employment services for better-skilled workers; and by providing incentives for public employment services to assist people who are not eligible for income support.

• Strengthen training guidance and counselling for redundant workers and for adult workers more generally, and the recognition of skills acquired on the job.

• Consider introducing an active redundancy insurance scheme which would replace voluntary redundancy payments and: i) combine financial support with pro-active support to facilitate job-to-job transitions; ii) cover all workers irrespective of their individual working arrangements; and iii) be financed through a payroll-based levy.

The report is available at: http://www.oecd.org/publications/back-to-work-new-zealand-9789264264434-en.htm


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