If adhered to the New Zealand Institute of Economic Research latest report, the government's nine-day fortnight scheme may just be an expensive waste.

Today, a discussion document was released by the economic consultancy that focused at the most effective means of dealing with the rising unemployment rate.

The document said international research has shown direct job subsidies to be expensive and tended to be extremely inefficient at creating or retaining actual jobs.
 
The report added further, “For every 20 jobs that are 'created' after the subsidy is in place, twelve would have happened anyway, five are just replacing unsubsidized workers, and one is due to displacement.  Only two are genuinely 'new' jobs.”

It was acknowledged by the discussion paper that the worst of these effects was avoided by the nine-day fortnight by splitting the cost between worker, employer and government, and the six month limit and small to medium business size threshold limited the scheme's application.   

It should be noted though that the document concluded that the scheme was, unlikely to have any noticeable impact on economy-wide unemployment.

It has been expressed by NZIER that over the next year, the jobless rolls would swell by 50,000 pushing the number of unemployed beyond those out of work in the 1997/98 recession.

(Via TopNews New Zealand. Contributed by Girish Kumar Guha)