90-day trials 'aren't doing much at all' - research

Unions claim the 90-day trials undermine employment relationships, but new research suggests this isn't the case.
Ross Giblin

Unions claim the 90-day trials undermine employment relationships, but new research suggests this isn't the case.

The Government and Opposition have no plans to ditch 90-day trials, despite new Treasury research concluding the trials have little effect.

On Friday a report was released showing there was no evidence the trial policy had increased the odds that a new hire was a young adult, Maori, a beneficiary or a recent migrant, all groups which have been shown to be disadvantaged in the job market.

The research, conducted by researchers at Motu, showed there was no evidence the introduction of the trials had increased short term hires, or made workers more reluctant to change jobs.

"My research shows that the 90-day trial period isn't helping people get jobs," Motu fellow Dr Isabelle Sin said.

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"However, it also doesn't make people less likely to leave secure jobs and doesn't make employment relationships less stable. Overall, my research suggests the 90-day trial policy isn't doing much at all."

Introduced in 2009 for companies with fewer than 20 staff, and extended to all companies in 2011, the trials give employers almost unfettered ability to dismiss employees within three months of hiring them.

However Workplace Relations Minister Michael Woodhouse confirmed the Government had no plans to review the trials.

Woodhouse said the research was flawed and asked the wrong questions.

The 90-day trials were introduced in 2009 at a time when the economy was in deep recession, and the Government was concerned to ensure vulnerable workers were still given opportunities.

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The trials were "a defensive measure, not a growth measure" Woodhouse said.

"To then go and measure it seven years later against a metric that to my recollection the government didn't have for it, that is, any material increase int he quantity of hiring, I think, is somewhat flawed."

Research showed a number of employers were using the trials and finding them useful, Woodhouse said.

During the 2014 election campaign, then workplace relations spokesman Andrew Little vowed to abolish the trials, but in July 2015 Little, then Labour leader, said the trials would be modified to require employers to give dismissed workers feedback.

On Friday, Labour's current workplace relations spokesman Iain Lees-Galloway said the trials had "failed" but maintained the party would simply modify the policy.

"Labour will change the law to restore fairness. Employers will be required to give decent feedback."

The trials have proved popular with small businesses, but have led to claims among unions that the rules are being exploited by some businesses to hire short term staff.

The Motu research looked as differences between the actions of companies with 15-20 and 20-24 staff in the 2009 and 2011 period, when the two groups faced different policies.

It found that across all industries there was an 0.8 per cent increase in hiring by companies able to take advantage of the trials, a figure described as "statistically and economically insignificant".

Within the wholesale and construction sectors there was a large use of the trial periods, resulting in a 10.3 per cent increase in hiring among companies able to use the trials.

However Sin warned that the increase was "statistically weak" and may not represent actual effects.

Dr William Cochrane, a lecturer at the University of Waikato's school of social science, said there was little surprise in the research.

The trials "seemed more about placating a particular constituency and compensating for poor human resource practice than improving the likelihood that people with poor labour market characteristics would gain employment," Cochrane said.

Council of Trade Unions economist Dr Bill Rosenburg said the research should prompt a review of the policy by the Government.

"The justification given for its introduction was in terms of increasing employment for vulnerable people but the evidence is that this law has clearly failed to do this."

In 2011, research by the New Zealand Institute of Economic Research (NZIER) concluded that the policy led to a 6 percentage points increase in hiring.

But Motu said its research suggested NZIER's research on the effects was driven by a "combination of an aggregated data sample, the short time period studied and a lack of accounting for the difference in effect on small and large firms of the global financial crisis".

* Comments on this story are now closed.

 - Stuff

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