Is the 90 day trial “working”?

Written By: - Date published: 7:00 am, February 4th, 2011 - 66 comments
Categories: employment, workers' rights - Tags: , ,

The New Zealand Institute of Economic Research (NZIER) recently popped up with a study purporting to show that the “90-day trial period” (the fire at will bill) is “working”.

It’s a pretty weak definition of “working”. But it seems that rate of new hiring in small business (to which the 90 day trial applies) is falling less quickly than it is for larger businesses. While not a lot of detail is supplied (show us your error bars!) the report claims that the differences are statistically significant, and concludes:

This analysis suggests that the policy has been a success to date, demonstrating the value of flexible labour markets to employers and employees alike. This success is likely to continue when the trial period policy is extended to all firms in the New Zealand economy.

The report and its conclusions were picked up and run by all the major media outlets. As usual there was no critical analysis, mostly just cut and paste of the talking points. Only the Otago newspaper offered any kind of balance:

Council of Trade Unions president Helen Kelly said nothing in the NZIER research contradicted the point that the law stripped employees of the right to a fair hearing and allowed bosses to sack people for nothing, which the CTU had proved was happening.

“The claim that hiring has declined less in small firms than in bigger ones is hardly a ringing endorsement.”

The fact that unemployment is on the rise again certainly underscores Kelly’s point.

Unfortunately for the NZIER the conclusions of the report are nonsense. The figures may be sound enough, but there is no way to determine the cause of the (comparatively less bad) performance of small businesses. To identify the 90 day trial period as the cause is classic post hoc ergo proctor hoc stupidity. There is a much more likely explanation.

The fact is that small businesses usually do better at exactly this stage of the economic cycle. In the early stages of recovery from recession, small businesses almost always lead the way. For just a few links, see Time Magazine:

The two economists looked at companies with fewer than 50 employees, and those with more than 1,000, going back to the 1970s—a period that spanned four business cycles. They found that the bigger firms, after adjusting for their larger share of the workforce, account for a greater slice of job destruction during and after recessions—whether through layoffs or simply not hiring workers they would have otherwise. Immediately coming out of a recession, smaller companies were an unusually important source of new job growth, but once economic expansion really took hold, large companies resumed the role of job-creator, added proportionately more positions late in the business cycle.

Those findings match up with what the Society for Human Resource Management has been observing in its monthly survey of members. In the last three months of 2008, 27% of small firms (fewer than 100 employees) reported decreasing total head count, while 45% of large companies (500 or more workers) did. That trend was due to continue into this year, with 11% of small companies anticipating decreasing staff by the end of March, but 34% of large companies planning such a change.

The LA Times:

In every recession over the last three decades, it has been America’s small businesses — those Lilliputian companies with fewer than 100 employees — that stepped forward, began hiring and pulled the country out of the mire.

A recent Washington based Center for Small Business policy paper

Small businesses often lead the way out of recessions. During the 2003- 2004 recovery period from the recession from the early 2000s, businesses with fewer than 500 employees hired almost 1.9 million workers, while businesses with more than 500 employees laid off over 200,000 workers.

Smallbusinessnotes.com outlines some of the possible reasons why:

The belief that small businesses fare poorly in economic slowdowns is a common misconception. Most solidly run small businesses actually hold their own during downturns. One reason for this misconception is that entrepreneurial ventures experience a different growth curve than more established businesses. …

A number of entrepreneurs, in fact, see a downturn as a time of opportunity. Not only do they have excellent employee choices, but as other areas of the economy tighten, many larger businesses are outsourcing services that small business can step in to supply. Entrepreneurs, after all, are noted for finding opportunity in the most unlikely places – why not a recession?

And so on and so on. In short, there is no proof at all that the 90 day trial bill has bad any positive effect on employment. Internationally all the evidence suggests that small businesses should be doing slightly better at this stage of the economic cycle, and they are. End of story.

66 comments on “Is the 90 day trial “working”? ”

  • Comments are now closed

  1. higherstandard 1
    4 February 2011 at 7:26 am

    Yes it is …… for those that it has worked for, but not for those for whom it hasn’t.

  2. Bored 2
    4 February 2011 at 7:37 am

    In every recession over the last three decades, it has been America’s small businesses — those Lilliputian companies with fewer than 100 employees — that stepped forward, began hiring and pulled the country out of the mire.

    Seems to me this demonstrates the failure of corporate business: it has become a rentier on the rest of the economy, a parasitic sector. All of you fools who rail about market efficiencies and the underlying dogma need to wake up and recognise that unregulated corporate control of the economy represents an enormous drain upon the actual productive sector.

    • higherstandard 2.1
      4 February 2011 at 7:43 am

      C,mon if it wasn’t for the large multinationals we’d have to reopen a heap of mental health facilities around the country.

  3. lprent 3
    4 February 2011 at 8:19 am

    r0b you beat me to it. That was exactly my thought when I read the NZIER blurb yesterday. Quite simply the idiot who wrote this report looks like they picked the result that they were interested in pushing and asked themselves if the numbers contradicted it.

    He ignored a number of other possible causes. For instance that having more people out of work gives a better selection to SME’s – which I have observed happening in previous recessions.

    To test it you’d need to look at a period earlier than boom time 2005 which is what the report author did not. You’d need to compare against similar economic periods in the past to see what SME’s were doing them.

    Bu quite simply the numbers support a number of different explanations. To me it looks like the author just picked one for the news media and the NZIER published it. Hardly the actions of a credible organization.

    • Marty G 3.1
      4 February 2011 at 8:37 am

      the nzier is funny, they have some good models that they use for the general economy that are quite accurate (like the model picked -0.2% GDP in the September quarter exactly) but the economic analysis is very much rightwing – their actual prediction for September ignored the model and claimed 0.5% growth.

      likewise, they dissed Labour’s tax policy because paying for it all with a new top tax rate would mean a top tax rate of 53% over $100Ka year but they ignored the fact that Labour had said only part of the money would come from a new top tax rate.

      interestingly, their model shows that higher food prices make us worse off, at least in the short-term, contrary to everything we’re told. but it makes sense though – wages don’t go up when the milk price does, so we’re worse off.

    • r0b 3.2
      4 February 2011 at 8:40 am

      Yeah, following the same methodology I should run the numbers, show that small businesses aren’t recovering as quickly as we would expect, and “conclude” that the 90 day trial is holding them back.

      • lprent 3.2.1
        4 February 2011 at 8:48 am

        It is one of the most egregious examples of wishful ‘analysis’ that I have seen for a while. I get the impression from Marty that it isn’t uncommon for NZIER. I guess they have built a business based on pandering rather than actual analysis.

        • prism 3.2.1.1
          4 February 2011 at 5:54 pm

          The NZIER economist sounded Canadian. Perhaps from the same institution that gave us Paula Rebstock. I remember back in the 1950-1960’s that we were British dominated and they tended to send their own nationality to take leadership roles. Now its wider, from all other English-speaking countries, and cheaper and easier than training and ‘building expertise” in our own people.

          And if you are going to buy overseas expertise, get the right brand, with the thread that veers to the right when you are trying to fit it into a right-twisting socket.

  4. mickysavage 4
    4 February 2011 at 9:08 am

    Let me get this right. So one statistic (creation of new jobs) is slightly better for one part of the economy (small businesses) than another part (large businesses) and this is offered as proof that the 90 day trial period works without any evidence of causation.

    And the media buy it hook line and sinker.

    And good old smile and wave reports that the latest unemployment figures are old and the job market is getting better despite there being a surge in unemployment and this line is again accepted by the media.

    All I can say is feck.

    • Draco T Bastard 4.1
      4 February 2011 at 11:38 am

      And the media buy it hook line and sinker.

      Yep, and you’d expect the MSM to have at least one person who understood statistics. It seems that NZ journalists are taught how to write but not anything about what they’re writing about.

  5. OleOlebiscuitBarrell 5
    4 February 2011 at 12:01 pm

    It is significant that Helen Kelly does not try to find fault with the NZIER analysis, just whether the trade off is worth it. In other words, reducing unemployment is not worth it if it comes at the cost of some people losing their jobs without due process.

    I can see how one could come to the opposite view.

    • mcflock 5.1
      4 February 2011 at 12:17 pm

      Dunno how significant it is – one edited quote in one paper.

      And if you’re against 90 day fire at will, you’re not exactly going to compete too well in the Otago Daily Tory.

  6. randal 6
    4 February 2011 at 2:00 pm

    so ROB.
    how many people have actually been fired under the 90 day law or is that privileged information and the proles only get the OPINIONS of certified commentators?

  7. BLiP 7
    4 February 2011 at 3:15 pm

    Its almost as if there is a concerted effort to manufacture confidence in the economy. All the statistics are negative, yet we are having this stream of bollocks pouring forth from those who should know better as if to say to the public “there, there, look! things are getting better, we just need to try a bit harder and keep smiling”. The original headline on that second link was: Unemployment jumps to 6.8%.

    Wasn’t there a piece here recently about the corporate mandate of always keeping a positive attitude . . .

    (Heh! Catpcha = blind)

  8. jbanks 8
    4 February 2011 at 5:18 pm

    [lprent: banned for trolling]

    • BLiP 8.1
      4 February 2011 at 5:20 pm

      Perhaps you missed this link ? Its a government report debunking your flimsy belief.

      • jbanks 8.1.1
        4 February 2011 at 5:27 pm

        [lprent: banned for trolling]

        • Pascal's bookie 8.1.1.1
          4 February 2011 at 5:34 pm

          So what’s debunked?

          a study confirming this

          Moron.

          • jbanks 8.1.1.1.1
            4 February 2011 at 5:39 pm

            [lprent: banned for trolling]

            • Pascal's bookie 8.1.1.1.1.1
              4 February 2011 at 5:44 pm

              What the report debunks is your belief that there is a study confirming that the policy was a great move. There is no such confirmation. There is thin data providing a skerrick of evidence if you squint at it with the light just right.

              • jbanks …
                4 February 2011 at 5:51 pm

                [deleted]

                [lprent: That was a moronic cut’n’paste troll that added absolutely nothing to the discussion. I see a couple more similar comments elsewhere. This is your first and last warning – don’t troll or I’ll ban you again for somewhat longer. ]

                • Pascal's bookie …
                  4 February 2011 at 5:55 pm

                  Oh I see where got confused.

                  Neither ‘likely’,
                  nor ‘appears’,
                  means ‘confirms’.

                  No charge,

                  fucknuckle.

                  Just don’t say we never do anything for you.

                  • jbanks …
                    4 February 2011 at 6:04 pm

                    [lprent: banned for trolling]

                    • BLiP …
                      4 February 2011 at 6:07 pm

                      The evidence suggests no such thing. You really should read the OP before parading your ignorance like John Key on a catwalk.

                    • Pascal's bookie …
                      4 February 2011 at 6:12 pm

                      Scroll up, read the thread, and stop attacking strawmen banksie boy.

                      You claimed confirmation. There isn’t any.

                      That’s all I’ve been saying.

                      There are a couple of studies, with limited data. I haven’t disputed either, so I can’t see how I’m a hypocrite.

                      Would you say that this particular NZIER study is robust? That it takes into account the other factors that might account for the data before making its claims? I have my doubts, so I think it remains pretty much in doubt.

    • Draco T Bastard 8.2
      4 February 2011 at 5:41 pm

      The study that you’re saying confirms your belief does nothing of the sort. All they’ve shown is correlation and, due to studies linking that correlation to other factors, very weak correlation at that. What it does do is show the total lack of standards at NZIER.

  9. prism 9
    4 February 2011 at 6:00 pm

    It is well known that there are right and left wing think tanks and institutions that serve the interests of their chosen mindsets. In NZ the Maxim Institute would be one I think of the right wing and the NZIER likewise.r

  10. Jum 10
    4 February 2011 at 6:18 pm

    I remember in 2008 after the election, National visiting small business who had said they were not looking to lay off staff, yet suddenly changing their minds after National visiting. What were they promised? I know! The 90day bill which meant if they could get rid of staff then they could rehire with all the power and none of the responsibility to their employees. So much for loyalty to staff. National supporting friends were laying off staff with no attempt to find alternative ways to give themselves slightly less profit but keep faith with their employees (LOL).

    I remember JKeyll visiting Pukekohe for a business lunch ($90 a head – those poor cash-strapped businesses, not – the large room was full of business people) where he told them that they would have all the power in the new Auckland. 90 day power.

  11. mcflock 11
    4 February 2011 at 6:36 pm

    I just read it a bit more closely.

    Keywords:
    “preliminary analysis” (we gave it to an undergrad intern over the summer break, and haven’t checked the data too closely but it looks okay at first glance);

    “is likely to have…” (we’re not confident, so we won’t say “strong association” in case said intern screwed up somehow);

    “appears to have” (let’s just reiterate that it could all be shite and we forgot to carry the 1);

    “total [job] numbers” (we haven’t bothered to adjust for a myriad of factors that might affect our topic of discussion, but that’s cool because we’re just like, doing the preminizzle schizzle, you dig?).

    I haven’t used that many qualifiers in a single paragraph (the one JBsupplied as support, btw) since I was impersonating how a data analyst would manage the transition into being a real estate agent.

  12. Jum 12
    4 February 2011 at 6:38 pm

    How dare a gang of rightwing nutjobs use the ‘NZ’ in their title. That implies they work in the interests of all New Zealanders. That’s a blatant lie. They manipulate, misinterpret and no doubt open-face lie (just like JKeyll who has been practising) if it helps them to get control of New Zealand workers.

    It’s as bad as the scum blogsite ‘kiwiblog’. There is nothing at all kiwi about these jerks and the bull elephant JKeyll stooge that runs it.

    As for maxim institute, they pretended to be oh so objective in their articles, regularly printed in the Herald while Helen Clark was Prime Minister, but maxim was attacking the rights of women, sometimes subtly in the small print in the last paragraph, much like Jane Clifton, Cully’s other half in the Listener, begins by being objective until you get sucked in and then attacking Labour, while ignoring NAct and its treatment of workers. Objective? NO.

    I have little sympathy for Labour if it insists on trusting its fortunes to the Herald and other main presses. Their overseas owners have their own agendas. Radio – apart from objective Mary Wilson who takes no prisoners whatever side of the political spectrum they are on, just as it should be…no luck there.
    Talk back – asp poison dripping there.

    Blogs only cover a portion of the public – sorry Standard. Believe it or not many NZers don’t even know what a blog is! Weird or what!

    • Pascal's bookie 12.1
      4 February 2011 at 6:45 pm

      Fergawdsake jum.

      The NZIER is pretty straight up. This is one study that looks like it was thrown together pretty quickly to generate a press release or two.

      Honestly, just dial it back to about, say, a 7. Please?

      • lprent 12.1.1
        4 February 2011 at 7:03 pm

        This is one study that looks like it was thrown together pretty quickly to generate a press release or two.

        That’s exactly what it looks like.

      • Jum 12.1.2
        4 February 2011 at 7:36 pm

        Nonsense. If the nzier, with small letters, is so straight up, they would have waited until they had dealt with all the alternate possibles. They didn’t. Shame on them.

        Dial it back? To the rort JKeyll is pulling on the rural broadband public – not likely.

        • Jum 12.1.2.1
          4 February 2011 at 7:40 pm

          captcha: behind
          I made my 7.36pm post without seeing what Lprent had posted.

          Frankly, that sort of behaviour from a group of people who expect to be taken seriously? Duh. They’re just JKeyll stooges.

    • OleOlebiscuitBarrell 12.2
      4 February 2011 at 6:56 pm

      How dare a gang of rightwing nutjobs use the ‘NZ’ in their title.

      How dare they, indeed. From now on, only those who can demonstrate that they are left of, what, randal, get to use “NZ” in their title. Everyone else must use “Nut Job”. You can publish an authorised list in the Nut Job Herald. Then you can reclassify all citizens as full-rights people, candidates and depositees.

      • Jum 12.2.1
        4 February 2011 at 6:59 pm

        LOL
        Captcha: suffered, and I certainly am from obvious rightwing trolls, who are acting ‘nicely’ so escape the blanking.

      • Pascal's bookie 12.2.2
        4 February 2011 at 7:01 pm

        Yeah, it’s pretty crappy rhetoric IHMO, from a blog commenter.

        Not like that Don Brash chappie who made being a mainstream kiwi the focus of a year long campaign, and explicitly excluded Maori, gay, and labour voters from being mainstream kiwis.

        nah, quite a bit like that actually.

        What sort of fuckwit would vote for that?

        • Jum 12.2.2.1
          4 February 2011 at 7:49 pm

          IHMO???

          • Pascal's bookie 12.2.2.1.1
            4 February 2011 at 8:16 pm

            Whoops typo, IMHO. In My Honest Opinion,….

            saying that you get to decide who is and isn’t allowed to call themselves a NZer is crappy rhetoric. Doesn’t help, isn’t persuasive, makes your side look bad.

            Basically, I think the rhetoric one use should be words one is prepared to stand by. That doesn’t mean you can’t use obvious hyperbole, or metaphors, or whatnot, but it does mean you have to be able to explain what the truth is that those things get at.

            It’s similar, (but not exactly like), when someone tells a joke where the humour is based on bigotry. It’s no defence for them to just say that it was a joke so therefore the bigotry isn’t real.

            It’s like when people throw the word ‘treason’ around.

            Treason is a crime, and it’s one that carries a very heavy penalty. It wasn’t that long ago that you could be hanged for treason. So when you say someone is guilty of treason, then you are saying that some pretty severe penalties should apply to them.

            It’s like when them there teabaggers in the US go on about second amendment remedies or the need for violent revolution. That is fighting talk.

            I’m not a pacifist.

            For that reason, I take fighting talk seriously. I honour it, if you like, with the respect it deserves. People die and kill for ideas. That’s just a fact. It comes to that through fighting talk.

            None of that means you can’t use angry, or even aggressive language. For the love of all that’s unholy no one could accuse me of being particularly temperate. Or god forbid, civil.

            Civility in discourse can be pleasant, and it has it’s place, but often it’s just the last ditch someone tries to hide in as the guns of truth pound closer. So don’t think I’m asking for civility.

            I’m just asking that we try and keep our rhetoric real. By which I mean, at a level that we are prepared to back up.

            If you want to throw around talk that assumes fellow citizens are not fellow citizens, I’ll be asking what you intend to do about that.

            Revolutionary talk, demands revolution.

            But however you like, that’s just me.

            • Jum 12.2.2.1.1.1
              4 February 2011 at 9:17 pm

              I decide what I want to say, not you, or anyone else, left or right. If LPrent decides I’ve gone too far in being angry with a poster he will say. This is his site.

              lprent 12.1.1
              4 February 2011 at 7:03 pm

              ‘This is one study that looks like it was thrown together pretty quickly to generate a press release or two.'(your words)

              ‘That’s exactly what it looks like.’ LPrent’s words

              ‘If the nzier, with small letters, is so straight up, they would have waited until they had dealt with all the alternate possibles. They didn’t. Shame on them.’ My words.

              If they were slightly objective they would have got both sides of the equation. This thread shows they didn’t.

              Frankly, I get angry that people don’t do their homework, or they are crosby textors. I expect people who study statistics and get paid to interpret them should be above suspicion of their motives. Statistics are being used by governments to persuade the public that their policies are needed. They are incredibly important to New Zealand’s future. “thrown together pretty quickly to generate a press release”your interpretation of their serious work – that’s disgraceful.

              “scum blogsite ‘kiwiblog’. There is nothing at all kiwi about these jerks and the bull elephant JKeyll stooge that runs it.” I believe that Kiwis must (I hope) be better than the posters on that blog.

              maxim institute, jane clifton – if they were totally unbiased I would not have a problem with them. But they are biased. They can be biased if they wish, but at least be upfront with the bias. It’s the manipulative aspect of country-wide read columns that should be objective. Instead, they persuade people by unfair means.

              Herald editorials play the same game as clifton – starts off sounding objective but finishes attacking the left and whitewashing the right. That’s bad journalism and I will continue to say so. That’s my prerogative.

              • Pascal's bookie …
                4 February 2011 at 10:55 pm

                I’m not saying you can’t say whatever damn fool thing you want to.

                All I’m saying is that saying that the NZIER are a bunch of RWNJs who “manipulate, misinterpret and no doubt open-face lie (just like JKeyll who has been practising) if it helps them to get control of New Zealand workers.” won’t be convincing to anyone who has done their homework and knows who they are. Especially if you base it on one press release.

                Editorial and columns are traditionally opinion pieces. They are under no obligation to be objective. They are not even necessarily designed to be convincing. Mostly they are designed to get you emoting. They want punchy stuff that makes readers go Yeah! or Nah!!

                And yes, those kiwiblog munters are kiwis. How is saying they aren’t real kiwis any different from Brash saying iwi, gays or labour voters weren’t real kiwis?

                If the left isn’t better than the right, then what fucking good is it?

              • lprent …
                4 February 2011 at 11:16 pm

                It isn’t my site. I just happen to do the tech work, much of the coercive moderation, and even have time sometimes to write comments and my quirky posts. But the hard work is done by the abler writers. It’s a coop where we do whatever we’re good at and have time to do.

                The idea with moderation is that self-moderation is the objective and I only tend to ‘notice’ consistent egregious behavior amongst long time commentators when it persists.

        • Jum 12.2.2.2
          4 February 2011 at 9:30 pm

          Pascal’s bookie

          Maybe you need to remember that the Maori Party are completely geared to helping Maori; if whites want to join and get helped by it that’s fine too. But Maori are the important ones. That was what the Maori Party said when they were accused of being racist in having a Maori party.

          However, I do get your drift.

          But, I also say that any independent institute purporting to manipulate/persuade New Zealanders to a certain way of thinking should not try to infer they are an important NZ institution. What are their credentials. Who runs the website? Who owns the website? Where do they get their funding? Come up with those facts Pascal’s bookie and then we’ll discuss how objective they really are.

          • Puddleglum 12.2.2.2.1
            4 February 2011 at 10:27 pm

            I can see your point Jum.

            If I started a cricket team in my street and called it the New Zealand Cricket Team a few people might take me to task for using the title. They might think I’m trying to say my team was more than it was. (especially if I started to put up posters advertising our games – and charging an entry fee.) It does, of course, happen a lot (e.g., The New Zealand Institute) – but that doesn’t invalidate your point.

            I don’t know why they don’t just call themselves The Institute of Economic Research.

            PB, they don’t call themselves “Some New Zealanders’ Institute of Economic Research” – that would be fine. They can call themselves New Zealanders if they like.

            This makes me think … I wonder if I can start a company called ‘The New Zealand Government’ (when all I’m referring to is the government at my private address)? Then I could put out press releases, world-wide … 🙂

            • Puddleglum 12.2.2.2.1.1
              4 February 2011 at 10:35 pm

              Just realised. If I called my cricket team The New Zealand Cricket Team, people might start to think my team is something less than it was.

          • Pascal's bookie 12.2.2.2.2
            4 February 2011 at 11:12 pm

            What are their credentials. Who runs the website? Who owns the website? Where do they get their funding? Come up with those facts Pascal’s bookie and then we’ll discuss how objective they really are.

            http://nzier.org.nz/about-nzier

            They’ve been around for over fifty years, which doesn’t surprise as I’ve been hearing about them for my whole life. I’ve never considered them ideological. I’ve read things from them criticising all sorts of parties and all sorts of positions at different times.

            If you choose to write them off as Maxim-like based on a single press release, go for it. But that means you won’t be able to quote them when they say something helpful to you.

            • lprent 12.2.2.2.2.1
              4 February 2011 at 11:27 pm

              It seems to me that they have been getting a lot more ‘political’ recently. Their analysis often seems at variance with their numbers and they seem to have dropped the concept of looking at the alternate explanations.

              I hate to think what it is doing to the value of their commercial work.

  13. Puddleglum 13
    4 February 2011 at 10:02 pm

    Eric Crampton has posted on this and ‘mis-guesses’ what the “leftie blogs” might argue.

    I think his first bullet point is telling. He leaps to the possibility that small businesses are less likely to hire than big firms, meaning that the report’s findings could be underestimates and oddly doesn’t comment on the opposite possibility (that small firms could be more likely to hire coming out of a recession). Sigh.

    Eric and Paul (Walker) like to tell us that they are neither left nor right – but Eric’s political slip is showing in that bullet point. He can’t wait for confirmation that the 90 day trial legislation helps with employment. He then says “nice stuff” showing that he has abandoned a critical and objective analysis. Quite embarrassing given he is flying under the explicit banner of being an academic (You know, ‘the truth is all that matters to me’).

    Then again, maybe Eric is a long time supporter of the Alliance. (So hard to tell with these ‘neither left nor right’ guys.)

    In the report, the leap to the trial period being causal is astonishingly incautious. Comparison to the previous year is hardly the point – as even Eric recognises.

  14. SPC 14
    5 February 2011 at 12:55 am

    There is only true labour mobility (an offer of a wage and acceptance market) when people can leave a job and get the dole while looking for another.

  15. tsmithfield 15
    5 February 2011 at 4:40 am

    Have to agree with you on this occasion, R0B. Not that I don’t think the 90 day bill hasn’t been helping. However, the analysis provided is far to simple to tease out the other variables that could have contributed to the result, as you have pointed out.

  16. Eric Crampton 16
    5 February 2011 at 5:35 am

    @Puddlegum: NZIER here is kinda trying for a “water flows downhill” result. There is really strong reason from basic price theory to expect it increased employment among the firms who were eligible. Of course you are right that if small employers tended in prior periods to do better, the results are overstated. That is the obvious corollary to the alternative case I noted.

    It wouldn’t much surprise me if the final analysis showed either no effect on hiring or a smallish increase. It would greatly surprise me if it showed bad effects. I hope NZIER is planning on finishing the job.

    • Puddleglum 16.1
      5 February 2011 at 11:39 am

      Thanks Eric. Well put. And I agree that that (increased hiring) is what price theory would assume/predict.

      But wouldn’t we also expect greater rates of firing (within the first 90 days of someone being hired) compared with larger firms, which did not have the 90 day option? If not, then it kind of raises the question of why the legislation was needed (or was it just to provide psychological assurance to employers who were actually misguided about the risk of hiring staff under pre-90 day trial legislation?). If there were greater rates of firing then it’s not clear to me why it “would greatly surprise [one] if it showed bad effects”.

      The cost, for individuals and their families, in terms of that increased material and emotional insecurity and harm done also needs to be factored into the policy choice.

      Then, of course, there’s the question of justice – which is a value of some concern. Allowing contracts to have clauses that allow them to be broken without explanation or recourse is an interesting reflexive undermining of the very notion of a contract.

  17. tc 17
    5 February 2011 at 6:18 am

    NZIER is very similar to the herald in so far as it starts with the answer it wants then goes From there.
    All this ‘independant’ opinion in election year will get worse as the right wing org’s help sideshow blag another term.

  18. Eric Crampton 18
    5 February 2011 at 9:14 pm

    @Puddleglum: We would expect that firms able to fire more easily during the trial period would do so. As for the magnitude of the effect – I’d be really surprised if it were that big. Firms don’t like firing people ’cause you have to train them. Say the first week on the job, the new guy is kinda useless while learning the ropes. You’re not going to fire him soon after he starts being useful unless he really isn’t worth keeping on.

    I wouldn’t count it as a bad effect if small firms fired more people – we should expect it. Folks who never would have gotten a chance were given one; it didn’t work out for some. I would count it as a bad effect if there were a lot of firms that tried churn as a strategy (hire, fire after 80 days, repeat). I’d have a hard time believing that to be a profit maximizing strategy for any firm, but if that were happening, I’d not count it as good; folks naming and shaming employers trying that on would probably be doing some good.

    • Daveo 18.1
      5 February 2011 at 10:07 pm

      I would count it as a bad effect if there were a lot of firms that tried churn as a strategy (hire, fire after 80 days, repeat). I’d have a hard time believing that to be a profit maximizing strategy for any firm

      You’ve obviously never worked in hospitality, retail or as a contracted labourer.

      You also put way too much stock in the idea we’re all rational materially self-interested individuals. I’ve seen plenty of managers and employers who have happily pissed away opportunities to maximise economic gains, particularly in relations to treatment of their staff, because their personal prejudices, superstitions, egos or personality disorders got in the way.

    • Marty G 18.2
      5 February 2011 at 10:55 pm

      “Firms don’t like firing people ’cause you have to train them. Say the first week on the job, the new guy is kinda useless while learning the ropes. You’re not going to fire him soon after he starts being useful unless he really isn’t worth keeping on.”

      like Daveo says, you obviously don’t have much experience of the industries where 90 days is most used and you mistakenly think that everyone is rational all the time.

      If everyone was rational all the time, we wouldn’t need work rights laws. They are there to protect workers from the unjust behaviour of bosses.

      If a boss has a geniune reason to fire a worker, there is a simple and short process to go through that provides natural justice and a testing of the validity of the sacking. That’s what National has removed in the first 90 days. It’s a bad bosses’ charter because they’re the only ones who would want to abuse their workers in that way and it subtly changes the relationship between bosses and workers, encouraging even good bosses to view treating workers unjustly as normal.

  19. Decent Income 19
    6 February 2011 at 11:05 am

    Contracted providers to the ministry of social development/winz are the ones who win from this. $5000.00 for every person they put in a job for 31 days only. Then the person goes back on the dole because it’s only a temporary role and so this goes no & on to the tune of $60 million dollars. Still no full-time jobs and a lowering of the the number of people signing on. So it doesn’t work, it’s not the answer! Hey I’m one of those who have to clean up the mess with dealing with the financial cost/mentoring & so on … another added cost! Full-time permanent work is the only answer not tinkering with the numbers!

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