Releasing the New Zealand Business Roundtable's submission on MP Wayne Mapp's Employment Relations (Probationary Employment) Amendment Bill, executive director Roger Kerr said opposition to it was “scaremongering”.

“Probationary periods are standard across the OECD with governments of the political left and right alike. Indeed, some of those with the longest periods are in Britain (under the Blair Labour government) and social democratic Denmark .

“The Mapp bill would introduce a 90-day probation period. Australia has gone much further and essentially removed so-called ‘unfair dismissal' provisions for firms with up to 100,000 employees and established a 6-month probation period for larger firms.

“Such moves reflect the reality that there is no sound case for such regulations. Far from ‘stripping away workers' rights', as unions have claimed, the Mapp bill would go some distance to allowing firms and workers to freely negotiate over whether they wished to include dismissal provisions in contracts. The evidence from New Zealand and abroad suggests most would not wish to do so.”

Mr Kerr said that inevitably mandatory provisions have perverse consequences, including lower wages and fewer jobs. Such ‘job protection' laws also discourage innovation and investment in risky and high-tech industries because it can be costly to lay off staff if ventures do not work out. Former US Federal Reserve chairman Alan Greenspan frequently observed that they were one explanation for the more dynamic performance of the US economy compared to European countries with more restrictive labour laws.

The bill would also allow employers to ‘take a risk' on marginal workers in a situation where the Maori unemployment rate is still 8 percent, the youth unemployment rate is 9 percent and the Maori youth unemployment rate a tragic 18 percent. It would make it easier for such people to get a foot on the first rung of the employment ladder.

“The Maori Party should be to the fore in supporting this bill”, Mr Kerr said. As the OECD wrote in its last report on New Zealand :

Introducing a minimum probation period for new employees during which the law related to unjustified dismissal does not apply would be a way to encourage hiring of … marginal groups [such as ‘at risk' older workers, young people or immigrants]. Indeed, this would give employers the opportunity to confirm the suitability of employees and would be particularly useful, as fixed-term contracts cannot be used as a form of trial period under the [Employment Relations Act].

“The government says it wants to promote growth and innovation and to improve social outcomes. With this bill, parliament has an opportunity to take a step in the right direction by enhancing New Zealand's labour market arrangements and bringing us more into line with those of more successful countries”, Mr Kerr concluded.

NZBR Submission

For more information, contact:

Roger Kerr
Executive Director
Ph: 04 499 0790
Email: rkerr@nzbr.org.nz

Web: www.nzbr.org.nz