One of the puzzles that we've got at the moment is why business confidence should be falling at a time when the global economy is going strong and New Zealand’s terms of trade are higher than they have been for a very long time.
Uncertainty is the answer. And one of the great areas of uncertainty is what the new Government will do to labour markets. They’ve indicated that they will remove 90-day trials for most employees and make a host of union-friendly changes.
Let’s not forget that this economy has been delivering a jobs boom over the past few years— 245,000 new jobs in the past two years. We've also seen the average wage grow by $1,300 a year since 2008. It now sits at $60,000 a year.
Why would you tinker with that success?
The new government says they want to help the most marginal young New Zealanders get into work, and yet their actions which include removing 90-day trials, will make it tougher for those same people.
If, as an employer, you're confronted with the possibility of hiring somebody who is unskilled, hasn't had any job experience, might have a few social issues, and hasn't got a great education, and you want to take that risk, would you be more likely to take that risk without a 90-day trial period. No. So it will be harder for those people to get their foot in the door.
The government’s own officials, the Ministry of Business, Innovation and Employment (MBIE), have said the proposed changes may well lead to "reduced employment due to changed incentives on employers to hire new workers".
A second potential outcome is "an increase in industrial action and protracted bargaining due to the need to conclude agreements and include wages in collective agreements".
Everybody in the country is well aware of the uptake of industrial action that we've seen since the election—the train strikes, the public transport strikes, which are dreadfully undermining the public's confidence in public transport. We'll see more of that to come.
I’d encourage anyone in business to take a good look at the proposed changes, and if they’re part of an organisation encourage them to submit on legislation.
I’d be happy to meet with any Verve readers to discuss the issue, in your place of business.