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ERB claims first victims

By Michele Simpson

Friday 16th June 2000

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TREVOR EAGLE: 'The legislation is totally not right for the knowledge economy'
One of the country's largest technology companies has dumped all its contract staff in preparation for the Employment Relations Bill - and is opting to replace them with India-based specialists working over the internet.

"The legislation is totally not right for the knowledge economy - the government hasn't thought it through, " Eagle Technology founder Trevor Eagle said.

Mr Eagle, also chairman of the country's High Tech Council, got rid of 50 contractors on April 1 because the legislation will be retrospective.

The move is likely to fuel the brain-drain crisis which already makes it hard for companies to find computer specialists.

The IT industry, estimated to be worth $4.2 billion in New Zealand, claims it could wipe out unemployment if those without work were retrained with technology skills as hundreds of jobs go begging in the nation's classified advertising sections.

"Under the ERB, the way contractors are handled means they stand to become a real liability," IDC research manager Patrick Pilcher said.

Other companies were likely to follow Eagle Technology's lead. "Startup ventures will be discouraged due to the high level of risk for directors and shareholders associated with employing high-income IT specialists as permanent full-time employees," Mr Eagle said.

Large recruitment firms placing contractors in the IT sector said the legislation would contribute to the difficulty New Zealand was having trying to keep contractors here.

"Why are there so many jobs? Where are all the contractors? On a plane if they are smart," Morgan & Banks Technology consulting manager Andy Mardell said. "The ERB is just another thorn in the side of many IT companies trying to grow."

Mr Mardell estimated recruitment firms putting contractors on the payroll would add a further 8% to the client's fee.

Motorola had considered as part of its research and development centre creating 1000 jobs for IT graduates but had to scrap its plans because there weren't 1000 IT graduates coming out of local tertiary institutions every year, Mr Mardell said.

"IT companies, capital and contractors will be driven offshore if they cannot attract the skill base required for research and development to take place," Mr Eagle said.



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