18 Jun 2016

Dismissal after 89 days 'taking advantage'

3:58 pm on 18 June 2016

An electronic engineer who was let go on the final day of his 90-day trial period says his employer was taking advantage.

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Photo: RNZ / Diego Opatowski

A new report commissioned by Treasury shows the policy of allowing employers to hire people for 90-day trials has not significantly helped struggling job-seekers.

Read the Treasury-commissioned report (PDF, 899kb)

Paul Martin, who lives in Upper Hutt, was recently hired for a job then let go at the last possible moment.

"At 4pm on the final day the recruitment firm which helped me get the job rang and said you've finished for the day, and other people also had that problem as well," he said.

He said his employer had taken advantage of him.

"I really don't mind working - it might sound stupid but I love working and at one stage I had one full-time job and four part-time jobs."

After being let go, Mr Martin endured a two-week stand-down period before he could get the unemployment benefit.

He said he and his family, who had a mortgage, luckily had the support of family members.

Waikato University lecturer William Cochrane said he never believed the 90-day trial period would have any significant impact on the labour market.

"While employers may be happy with the extra power they gain from such provisions, the need to hire arises from the demand for an employer's goods or services - while the person hired is chosen for their superior labour market attributes," he said.

The Treasury report released yesterday concluded the main benefit of the policy was a "decrease in dismissal costs for firms", while many employees faced "increased uncertainty" about their jobs for their first three months.

Workplace Relations Minister Michael Woodhouse told RNZ News he agreed with that finding, but added the 90-day trial was never about creating jobs.

"The policy wasn't put in place to materially increase the number of jobs in the economy ... and for that reason, the report is actually of reasonably limited use in assessing the successful outcome or otherwise of the trial periods," Mr Woodhouse said.

Mr Woodhouse's statements today contradict what the government told the public in 2008 when it said the policy would help create new jobs.

In a media release titled "90-day trial period to provide job opportunities", then-Labour Minister Kate Wilkinson said the policy would "provide confidence for employers engaging new staff" and allow "struggling job-seekers to get their foot in the door, rather than languish on a benefit".

When the government extended the trial to all businesses in 2011, the minister said that was part of the government's focus on "creating more jobs for New Zealand families".

In 2012, based on a report from the New Zealand Institute of Economic Research, the government claimed its 90-day-trial period was so successful it had created 13,000 new jobs in small-to-medium sized businesses.

Prime Minister John Key said he also fundamentally disagreed with the new report's findings - and anecdotal evidence showed the policy worked.