On Friday last week, the Treasury released a report by MOTU economic consultants into the effectiveness of the controversial 90-day work trial legislation. The report found that there was “no evidence that the policy affected the number of hires by firms on average, either overall or into employment that lasted beyond the trial period” – which is what National said it would do. It also had no effect on the number of “disadvantaged jobseekers” being hired. In short, 90-day trials have failed to do what National said they would do.
National first introduced 90-day trials for people who work in smaller businesses in 2009, and then extended them to all sized businesses in 2011. These trials allow anyone to be fired in their first 90 days at a new job, no questions asked. The idea is that employers would take a chance on someone new if they knew that they could get rid of that person after 90 days, no questions asked. But now we know it hasn’t worked.
Within hours of the MOTU report, the Prime Minister was attempting to discredit the report by saying that he didn’t believe it and his evidence from popping into cafes suggested differently.
By Friday night, the National Government, while continuing to discredit the report, also decided to change its mind about why 90-day trials were introduced in the first place. The Minister for Workplace Relations, Michael Woodhouse, said the policy was never about was getting more people into work – let alone more people who find it hard to get jobs.
But that was exactly what the Government said the point of the 90 day trials was when they were introduced. The then minister, Kate Wilkinson, said that by changing the law to allow employers to dismiss an employee any time within the first three months of work would encourage businesses to take risks and hire more staff. The Government also said that the law would make it easier for those who find it hard to get work – those who have been unemployed for a year or more, workers under the age of 25, and particularly Maori and Pacific job-seekers.
That didn’t happen.
What did happen with the 90 day trials?
What did happen, and what the MOTU report shows, is that the fire-at-will law has reduced costs for employers for personal grievances – disputes taken under our employment law for unfair dismissal. It’s made it cheaper to fire people.
I suspect the law change was driven by ideology – another example of the government removing reasonable rights for employees and certainly undermining the ability for unions to recruit new members. What new worker is going to put their head above the parapet in their first three months and join a union, or highlight irregular work practices or health and safety breaches, if they could lose their job for any reason at all at the whim of their employer?
Employers have always had the ability to dismiss employees who aren’t performing well. They just needed to be fair about it. What the 90-day law has done is help create a workplace relations environment that encourages employers to not be fair.
We need to get rid of this law entirely.