90-day worker trials achieve nothing - study

90-day worker trials achieve nothing - study

A report showing the controversial 90-day trial for workers has done nothing to increase hiring or help the disadvantaged isn't worth the paper it's written on, the Workplace Relations Minister says.

The legislation was rolled out to small businesses in 2009 and taken nationwide in 2011.

But the Treasury-funded Motu Economic and Public Policy Research Trust report found no evidence it significantly increased overall hiring, with a "statistically and economically insignificant" 0.8 percent across all industries.

However, there was a "weakly significant" 10.3 percent hiring increase in the construction and wholesale trade industries.

The trial also did nothing for so-called disadvantaged jobseekers, which Treasury defines as including beneficiaries, jobseeker beneficiaries, recent migrants, those under 25 and young Maori and Pasifika workers.

The policy didn't appear to increase the probability a new hire would stay with the same employer for at least two, five, 12 or 24 months. It doesn't look like it's substantially increased short-term hiring either.

Workers also don't seem less willing to change jobs as a result of the policy.

But Workplace Relations Minister Michael Woodhouse says the report focused on the wrong thing.

"The purpose of the 90 day trial period was as part of a basket of flexibility measures we put in to ensure employers had every tool they could to recruit when there was uncertainty or to maintain when there was uncertainty, so frankly the report asks the wrong question, so is of limited or no value.

"Has there been material job growth? That was never the intention."

But that's exactly what the Government said it would do. In 2010, then Labour Minister Kate Wilkinson said employers wanted to invest and grow their businesses but didn't want to face personal grievances if they hired someone who turned out to be unsuitable.

"They simply chose not to hire anyone. The 90-day trial has changed that," she said.   

Mr Woodhouse says he's heard anecdotal evidence the policy is working, including from NGOs which work with the disabled.

The Ministry of Business, Innovation and Employment surveyed a number of employers in 2013/14 which indicated 63 percent had employed a new staff member in the past year using the trial period.

Twenty percent had used the trial period to dismiss at least one staff member during or at the end of the period.

He said he didn't ask for the report and wasn't expecting it.

The report should have looked at whether there'd be a difference in job numbers had the legislation not been in place.

"They've gone down the easy path to say there was no job growth, but what they haven't done is to say 'did this policy prevent job loss?' And I think this is a very difficult question to ask, but it's one they didn't bother with."

Labour's workplace relations spokesman Iain Lees-Galloway says the "fire-at-will" legislation unnecessarily put workers at risk with marginal gains for employment.

"It seems to have had a negligible effect either way, but the question has to be asked why would you expose workers to the risk of exploitation, the level of unfairness when there's no obvious benefit from an employment perspective?"

He believes the legislation is more about National being "bound by ideology" rather than what's good for employees.

"This is what you get when you follow ideology rather than evidence."

Mr Lees-Galloway says he's spoken to workers who've felt they couldn't voice their concerns about health and safety or feel they could join a union for fear they'd be dismissed during the trial period.

Labour is currently working on a policy which would include employers needing to give a reason for dismissal, give workers an opportunity to address any problems and for concerns about employment to be raised early on.

But Mr Woodhouse, a former employer, says "you'd have to have rocks in your head" to behave in the way Labour fears. He says a lot of investment goes into hiring new people, even for a trial period.

Waikato University social sciences lecturer Dr William Cochrane isn't surprised, because he always doubted the policy.

The trial "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".

CTU director Bill Rosenberg says the justification for the legislation was to increase employment for the vulnerable, "but the evidence is that this law has clearly failed to do this".