Julian Wood

By Julian Wood - 16/11/2016

Julian Wood

By Julian Wood -

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The true cost of getting “Ready for Work”

Labour’s “Ready For Work” policy is a great idea. Unveiled at the party’s conference, the plan offers on the job training for unemployed young people by paying them (through a wage subsidy to employers) to work fixing Department of Conservation (DoC) tracks, killing pests, or riperian planting. The concept is laudable, providing investment in our unemployed youth with the chance to change the trajectory of their lives by letting them see the difference working and earning an extra $300-$400 a week can make. And, at Labour’s quoted costing of $60 million for the programme, it’s a steal.

Unfortunately this $60 million only covers the direct wage costs (if that). The real cost of the policy will be much higher. It needs to include some the costs of employing someone, some of the hidden costs associated with being hired, the administrative costs of ensuring that employers don’t just take advantage of the system as well as the indirect costs of potentially longer job search for unsubsidised unemployed. All that doesn’t come cheap.

It is not costless to employ someone. For an employer, costs go well beyond wages. New workers will have to be trained how to safely repair tracks in remote areas. Existing workers might need retraining to effectively manage a crew of recently unemployed workers. While DoC currently works with many volunteers for these tasks, even a brief overview of the DoC website reveals that volunteers have to make a real commitment in time, money, and training before they are “volunteer ready”. It certainly doesn’t look like a role we just throw an unemployed youth into without significant investment.

It is not costless to take a job. How many young people will have a full set of work gloves, boots, socks, thermals and wet weather gear lying around? Should we expect someone to purchase all these items for four months of work? Is DOC supposed to pay? In their release Labour admits that “DoC is [already] struggling to meet its goals in the face of funding and staffing cuts.” Costings must include a range of associated funding for these proposed employers, (DoC, Regional Councils, NGO’s, and charities) to administer and look after these “free workers.

On top of this, wage subsidies are attractive incentive for employers to take advantage of. Someone will need to check that these are actually additional jobs, and not just an employer replacing existing workers with subsidised workers. Subsidising jobs to provide work for young people might well mean existing workers lose their jobs. It’s also highly likely that non-subsidised workers will now take longer to find a job. It’s easy to assert that care will be taken to design the system to minimise these costs. Actually ensuring this doesn’t happen costs money as well.

We need to help young unemployed people. We can’t just throw our arms in the air and say the problem is too difficult to solve. But let’s be honest about how expensive a scheme like this actually is.

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Julian Wood

By Julian Wood -

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