90-day trial prompts more staff hiring - survey

Widening the 90-day trial period for new workers could mean new job opportunities, says KPMG. Photo / Martin Sykes

As the Government moves to extend the 90-day probation period to all New Zealand businesses, a new survey has leant weight to its claims that the scheme has prompted some to hire new staff.

Accountants KPMG have today released its '"Mood of the Market" survey which showed that small and medium sized enterprises (SMEs) are expecting to employ more staff, but employees are still nervous about job security.

The survey also showed that confidence was rising for SMEs, that they expect to retain or raise employment levels in the year ahead and that profits are also expected to rise.

The 90-day trial period for new employees ws previously only for small businesses, but has been extended to all businesses.

KPMG's head of Business Advisory Services, Mark Kippenberger said
conversations he'd had with SME clients indicated that the 90-day trial for new employees had "removed a perceived barrier to take on more staff."

He said "most new staff members" joining the SME business retained their jobs after the trial period ended.

Kippenberger said that the 90-day-trial was "unlikely to affect employees that were genuinely interested in performing and contributing to growing business revenue."

"Employers may be reluctant to let further staff go after recently experiencing one of New Zealand's tightest labour markets leading into the Global Financial Crisis," he said.

"Websites, such as Trade Me and SEEK are also now experiencing a pick-up in job advertisements which illustrates more companies are now looking to rehire and the skills shortage could resurface as a result."

The survey results suggested that the widening of the 90-day-employment options to all businesses would see more job openings in the SME sector, said Kippenberger.

The survey also showed that 60 per cent of the SMEs surveyed expected profits to rise in the year ahead, but staff morale appeared to remain an issue.

"Not replacing staff who leave their business coupled with redundancies through the Global Financial Crisis may have left individuals feeling overworked, under resourced and not well placed to take on new work demands as businesses pick up and gear up for new sales opportunities," he said.

Labour Minister Kate Wilkinson said the 90-day trial period, which previously applied to businesses with 20 or fewer employees, had been a success.

It was introduced soon after the 2008 election, amid strident union protest.

"Rather than have the sky falling in, as was hysterically proclaimed, employers of small and medium-sized businesses gained the confidence to hire new employees," Wilkinson said.

"Without the trial period, hundreds of New Zealand workers would not have the jobs they currently do have."

Wilkinson said employers wanted to invest and grow their businesses but didn't want to face a personal grievance if they hired someone who turned out to be unsuitable.

The KPMG research is an 'opt-in' survey and reflects the responses of 223 New Zealand clients.

Of the 223 respondents, about 20 per cent of companies had a turnover of less than $500,000; nearly 40 per cent had a turnover of between $500,000 up to $5 million; about 10 per cent had a turnover of between $5m and $10 million; nearly 3 per cent had a turnover of between $10 and $15 million; and nearly 30 per cent had a turnover $15 million.

- HERALD ONLINE