Further on Labour’s Unemployment Insurance Scheme

by Don Franks

 “Having a scheme that protects workers will remove some of the fear associated with redundancy.” 

So said NZ Council of Trade Unions President Richard Wagstaff about the Labour’s compulsory income insurance projection. 

Apparently bosses’ redundancy associated fears might be removed too.

Political commentator Grant Duncan noted: “Employers actually quite like the idea because it would make it easier for them to initiate redundancy processes and terminate jobs, as the state would be covering the costs of redundancy compensation”

A redundancy scheme partly paid for by individual workers on different rates also makes life easier for union officials. Anyone who’s been involved in trying to mount collective struggle in a redundancy situation knows the awfulness of the task. Normal union channels are rendered almost impotent in redundancy situations. How much more pleasant for union offices if the box was already ticked by the workers themselves. Yes, a pity about those paying their unemployment levy but ineligible for any compensation. The CTU endorsed scheme CTU requires six months service with the employer before any payout, still, you can’t please everyone. 

Unions have various options in redundancy situations, the most extreme being occupation of the workplace by the staff. This option presupposes a determined workforce with union reps prepared to back them all the way. It’s a gamble not for the faint hearted, but has been used with various degrees of success in numerous countries, including New Zealand. Occupations and other direct worker’s action such as picketing or supportive strikes are of course anathema to the Labour Party and anyone wanting to be best buddies with them. 

From a working class point of view other traps are lurking in Labour’s scheme. Several observers have attacked the proposal because it ‘bakes in’ income equalities already existing in the labour market by paying out at 80% of previous earnings, rather than at a needs-based rate. As No Right Turn blog put it:

“what Labour is proposing is a two-tier system, generous for the rich and the middle classes, and outright brutal for the plebs in poorly-paying jobs or on short-term contracts, who will pay and pay and never see anything. The effect will be to insulate the middle classes from the horror of the existing welfare system, so that they never have to contemplate dealing with WINZ, undermining social solidarity and further marginalising those already at the bottom.”

Individual unemployment insurance schemes for employees spells further atomisation of the working class and further reduction of union relevance, seemingly a price the CTU is happy to pay.