Thursday, the New Zealand Prime Minister John Key announced the extension of the Job Support Scheme to include medium-sized businesses with 50 to 100 workers.

The scheme that emerged out of government's Job Summit held in February, allows private sector businesses, workers and unions negotiate voluntary agreements to reduce their hours of work to a nine-day fortnight. The government will pay employers NZ$12.50, which is the adult minimum wage, an hour per worker, for up to five hours a fortnight.

Thus far, three firms have adopted the scheme, which was originally intended for firms with more than 100 employees, Key said in a statement. Employers and unions endorsed the extension of the scheme to medium-sized businesses because it may help save jobs, he said.

It is aimed at businesses that may be facing temporary adverse circumstances in the current economic climate. A temporary reduction in hours gives employers time to ride our adverse conditions and gives workers job security during that time.

The expansion of the scheme is expected to allow access to extra 2000 firms and nearly 140,000 workers. The government estimates that if around 6000 workers from medium-sized businesses take part in the scheme, it would cost around NZ$4.5 million.

Key noted that the scheme will not be extended to firms employing fewer than 50 employees, though they are facing tough times. Small firms would find it too difficult to administer the scheme, he said. However, work is under way on measures to help small firms, and there will be further announcements on this in due course.

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