this post was submitted on 18 Jan 2024
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I’d agree, but outsized severance packages are one of the reasons Europe snaps out of recession slower than the US. It especially affects entry level jobs, contributing to Europe’s higher rate of youth unemployment.
Companies are afraid to go on a hiring spree when the economy picks up because they’d be assuming liability for severance if the new business venture doesn’t work out.
Best of both worlds is to make it easy to hire and fire, but ensure there’s a strong social safety net for workers caught out by a recession.
I'm going to digress from the economics a tad and focus on the ethics of this. I feel like companies should be on the hook for this. You should invest in capital (including human labor) based on your confidence in its expected return. Companies should not be able to hire a myriad of workers for funzies and not have to meaningfully consider if that person will be necessary in 6 months. If it is a legitimate business venture, then the cost of potential severance for new hires should be folded into the economics of the decision to pursue that venture. Larger severance pay/worker protections encourage employers to not utilize exploitative hiring practices.
I guess you’re OK with putting a damper on entry level positions if it protects workers who already have a job.
I mean if the only way they're gonna have jobs is through predatory hiring practices that could leave them fired and without severance, then yeah. Because if the company is planning on hiring these younger workers for the long-haul, then this shouldn't be a significant change. I think overall national policy should discourage unnecessary high-turnover and predatory hiring. I'm sure there will be situations this is still unavoidable, but that doesn't mean we have to endorse it by way of law/policy.
Yeah, what companies want is all jobs to be exploitable like entry level jobs. That's kind of what's happening now with stuff like Uber where companies get away with paying their employees as little as possible and few benefits.
Protecting and providing incentive to hire for the long term seems like better thing in the long run over many crappy low paying jobs.