Wednesday, March 11, 2009

The Nine Day Fortnight

So, good idea or not?

Here's the skinny. If redundancies are in the pipeline, a business of over 100 employees can get 10 people to work a 9 day fortnight, for every one potential redundancy to keep the wolf from the door. For this the employees who take the day off will receive a minimum of $12.50 an hour, for 5 hours, so $ assumes less tax. This can be topped up by the employer.

'A' for effort with the government for trying something to help struggling businesses.

Will it work?

Short answer is "No!"

Lets look at an example of a minimum wage workplace. Up to 10 people on the scheme (that's 10 people on $12.50, one day a fortnight) for every potential redundancy. So if 10 jobs are at risk, all 100 people can take part in this scheme.

This would save the business $1000 a fortnight, or $500 a week per 10 people. The scheme can only be run for 6 months, so that saves the business $13000 total per 10 people so $130,000 for all 100 to be on the scheme. The EPMU has said it will only support this if the employer tops up the lost wages some that will eat into the $130k.

No remember that this hypothetical business, of 100 people on minimum wage has a payroll of $2.6 million...

Will $130k stave off redundancies...short answer..."No!"

The other thing to remember is that there is also the 2080 work hours that workplace will be down over that six months per 10 people, or 20,800 in total if all 100 people worked 9 days, one would think it needs to be made up by others, or on another day by the people who have taken the 9 day fortnight. This on top of the fact that the scheme is voluntary by the employee, and how many of us are prepared to take a cut in wages leads me to my pessimistic, cup is half empty view.

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