Winners and losers in 90-day trial

Andrew Little

For a start, National itself had altered the Employment Relations Act with changes to improve labour market flexibility. But it did not challenge the basics of the Act or revolutionise workplace law.

Labour will now seek to reverse National's changes and is exploring others. This began with an announcement last week about the 90-day trial period and rest-break timing.

It should be remembered the big unions are members of the Labour Party and their financial support underpins the party. They have a major say, as was manifest in the election of Jacinda Ardern's predecessor Andrew Little and in their earlier work on the Employment Relations Act and the Holidays Act under the Helen Clark-led Labour Government.

The standard constraint on sharp changes - by either major party - is public opinion. Neither wants to get too far ahead of centrist voters, those who decide who governs. Labour's politicians can always try to persuade its union constituents that particular changes will not be accepted widely enough. Push the changes through and too many votes will be lost. Push too hard and National will win the Treasury benches.

A second constraint for the present Government is New Zealand First. While the Greens will be pulling Labour left, New Zealand First on matters such as labour laws is likely to be conservative. Large numbers of owners of small businesses have always been numbered among its members.

So it has come to pass with the 90-day trial period. Despite the disappointment of the Council of Trade Unions, the trial remains in place for businesses employing fewer than 20 staff.

The realists in Labour will probably be pleased. This could well be the first of several issues where Labour and Greens policies are moderated by the NZ First influence, making more of Labour's policies acceptable to middle New Zealand and helping Labour win the next election.

For small businesses, including farmers, the compromise is a relief. Unfortunately, about 70% of employees work in 20-plus employee businesses, and these companies and organisations will lose positive hiring flexibility.

Despite little evidence the trial periods were being ``gamed'', as the Council of Trade Unions has claimed, unions tended to dislike the trials. Less secure new workers would be less likely to join unions, and their fundamental focus is staff in workplaces, not those seeking work. That is where their interest lies.

But what of those potential employees? What is best for them?

As long as employers managed employment steps correctly, they had the right to drop the staff members within 90 days, no questions asked.

What losing that ability encourages, however, is a more cautious approach to employment, and both employers and potential employees will suffer. Given the hazards of mistakes, employers will be more inclined to play safe. They will be more likely to recruit someone from a background they know and understand, someone similar to current employees, someone with connections they can check. Whom you know becomes even more important, making it more difficult for outsiders.

The potential of the ``safe'' employee might not be as great as that of someone who has been out of the workforce for a while, someone from a different culture, someone with a disability. But taking on employees is fraught with trouble. Risks are not worth taking without an escape route.

It might, in fact, be better not to employ anyone and make do rather than take risks. Again, it is potential employees who will suffer. Fewer jobs will be created.

Further, nearly all employers, through recruitment, induction and training, are likely to have put considerable effort into new employees. It is in the employers' interests for the person to work out. They will not want to let 90-day employees go unless it is really necessary.