NZIER (NZ Institute of Economic Research) research published last month claiming to show the government's 90 day "fire-at-will" law has increased hiring in small firms draws invalid conclusions from a flawed analysis, the Council of Trade Unions (CTU) has said.

"There is no basis for NZIER and the Minister of Labour to present these findings as evidence that the 90-day 'fire-at-will' policy has resulted in the creation of jobs," CTU Policy Director and Economist Bill Rosenberg said.

"The report's claim is unsupportable. NZIER did not know if employers were actually using the 90-day trial. Instead they simply took as an indicator the two factors that a firm employed fewer than 20 staff, and that the time period was after the new law came into effect on 1 March 2009. This confuses timing with cause. We don't know if any change in hiring practice is caused by the new law, by a statistical artefact, or by the many other changes occurring around that time," he said.

Other changes which may have affected results include government tax changes and other assistance targeted at small business introduced at around the same time, other stimulus measures which could have assisted small business disproportionately, and upheaval in the economy, international trade and job market in the depths of the recession. It could even be partly a statistical artefact caused by firms shrinking in size.

"The NZIER paper deviates far from accepted standards for reporting research findings," said Rosenberg. "It fails to clearly describe the data it uses, specify the model it uses or provide its statistical results in full."

"The value of brief reports on items of interest should not be allowed to outrank good scientific method."

"The 90 day fire-at-will law is a major and contentious issue because it impinges on important internationally recognised work rights of New Zealand employees, and the availability of not only jobs, but work under conditions of dignity. It deserves serious and soundly based scrutiny."

+ CTU analysis of NZIER paper