
Feeling ‘Pressure All the Time’ on Europe’s Treadmill of Temporary Work - elorant
https://www.nytimes.com/2017/02/09/business/europe-jobs-economy-youth-unemployment-millenials.html?_r=1
======
swingbridge
Mostly a result of regulations that make it difficult for companies to get rid
of people (either because they're not good or the company needs to shed
staff).

I've seen this sort of thing backfire a lot in Europe where well intended
regulation causes far more harm (both to individuals and the economy of the
country) than good.

Was in a meeting not too long back where major investments were being
discussed and the places to invest where on the table (with jobs at stake).
Long story short some regulatory monkey was saying "this ref prevents this,
you'd have to do that" and such for a location in Europe at which point the
execs in the room basically just said "fine, we just won't invest there... if
they want to have silly practices we'll just put the jobs elsewhere." And they
did.

I'm no Republican but the concept of regulations killing jobs and hurting the
people they intended to help is a very real thing.

~~~
dikdik
The same argument can be made about taxes. Based on your reasoning, it's a
race to the bottom for all countries in order to attract businesses.

Are we supposed to have no regulation and no taxation on businesses because
otherwise some other state/country can offer them a better deal? Or do we need
to have stronger regulation across country borders/policy that prohibits these
loopholes. Maybe we should tax a US company more if they choose to produce
products in another country to get around regulations that we have in the US.

~~~
lefstathiou
Thought experiment here but I think there may be an argument for no taxes on a
business by flowing the taxes through to personal income. Double taxation
creates incentives that I don't think are good for small businesses on a
systemic level.

Here is why: as a business owner I face a 40% tax rate at the corporate level
and then 35% on personal income. I am thus highly incentivized to keep profit
in the business and reinvest it or look for growth opportunities rather than
distribute it to myself and our other shareholders.

Now imagine you are Sam Walton of Walmart. You stumbled upon a fantastic
business model that prints money (or your Apple sitting on $250bn in cash). On
the margin you will always opt to reinvest the money in the company or at
least let it sit there unspent (i.e. Apple/Google/Msft) if the alternative
means paying an incremental tax on it. So what do you do? Grow grow grow.

Anyway just wanted to share my thoughts. I am not trying to be
controversial... I believe that long term sustainable health of an economy is
predicated on the health of small businesses. I genuinely believe double
taxation may have a potentially perverse incentive and negative outcome on a
society simply by the way it alters my own decision making and incentives.

~~~
cylinder
If in the US and a small business owner you should use S-corp taxation to
avoid that. But yes small business has too many challenges in the US, it's the
land of megacorp dominance.

------
sokoloff
Here's the key line in the article:

> Under European labor laws, permanent workers are usually more difficult to
> lay off and require more costly benefit packages, making temporary contracts
> appealing for all manner of industries, from low-wage warehouse workers to
> professional white-collar jobs.

Make it extremely costly for an employer to _exit_ a permanent contract and
employers are less willing to _enter_ those contracts. Shouldn't be terribly
surprising.

~~~
wyager
This is a very common theme with labor laws. Most people are very, very bad at
predicting second- or higher- order effects of a regulation. If the market
encourages some behavior one doesn't like (like firing people), it may be the
case that one is simply too myopic to comprehend whatever large-scale
stochastic optimization the market is doing, and what's going to give when one
stops that optimization from happening.

As a result, many (most?) well-meaning market restrictions end up hurting more
than they help, often in indirect and difficult to quantify ways spread out
over thousands of different interactions. This (friction introduced by the
inability to fire people who should be fired) is actually one of the easier
examples to point to.

~~~
monk_e_boy
Ir reminds me of all the weird policies regarding programmer pay vs
performance that I've seen.

Get a bonus for most bugs fixed? Lots of bugs produced, logged and fixed.

Get a bonus for bug free code? Very little code produced.

I do think for economics a more detailed simulation is needed in which we can
try different laws before they passed.

~~~
sokoloff
The problem with simulation for testing is that it requires creativity.
Creativity of a distributed set of actors, each acting in their own
(perceived) self-interest and trying to find exploits.

If you program a simulation with the same type of thinking used to draft the
law, assuming that people will employ and comply with the law "as intended",
you're liable to fall prey to an exploit that you weren't creative enough to
think about, else you'd have (possibly) addressed it in the law.

------
vertex-four
Hold on a second. People are essentially suggesting "strip the regulations,
let companies fire people at will". How precisely are short-term contracts
worse than at-will employment where you can be fired at a moment's notice? You
need to constantly have one eye on the job market either way, or risk losing
your income security. At least short-term contracts don't create an
information asymmetry - you need to find a new job at the end of the contract,
not whenever your boss decides, for reasons unknown to you, that they don't
need you any more.

If workers want security in employment, they're going to have to create it
themselves - through worker-owned companies.

~~~
maverick_iceman
There are several advantages to the employer to have temp contract workers
rather than full time employees (even at will). You don't have to pay them
benefits like health insurance, workers' comp, 401k etc. Also if they get
fired they are much less likely to bring a discrimination lawsuit.

~~~
vertex-four
This is the EU, not the US.

------
morsch
The article calls dismisses one or two year contract jobs as temporary work.
_All jobs are temporary in at-will environment!_

Meanwhile, according to the article (which quotes a report based on numbers 5
years old, so who knows how things are now), 50% of new jobs in the EU are
still _permanent_. And 20% of the temp contracts turn into permanent
positions.

Not that permanent is actually permanent, employers in the EU fire permanent
employees all the time (either for cause, or because there is no viable
business alternative; permanent positions also come with a 3-6 month "at-will"
probationary period).

~~~
zigzigzag
No, it's not the same.

Laws that are different for "temporary workers" normally require those workers
to genuinely be temporary. That means you get laid off when your time is up
regardless of whether you are doing a good job or whether the company wants to
keep you: unless you are spectacular, your contract ends and it's someone
elses turn.

In an environment with very liberal labor laws, there is no government
enforced "time up". If you're doing good work and the company still needs you,
then you still have a job.

And as you point out, "permanent" jobs aren't permanent anyway. I can't really
see good reasons to have such tight labor laws.

------
elevensies
Given the levels of unemployment in the EU over the last 10 years, and the
current million+ a year immigration rate, this is going to get worse before it
gets better. A lot worse.

~~~
pasquinelli
Why would new people coming in drive unemployment up?

~~~
maverick_iceman
Um, supply and demand? Fixed number of jobs, more applicants. So unemployment
goes up almost tautologically.

~~~
pasquinelli
more people, more demand for goods and services, more jobs.

------
todd8
Years ago, I was told by an executive at a company that I did some consulting
for that it cost them the equivalent of seven years of an employee's annual
salary to fire someone if the employee was working in their French subsidiary.

I suspected that there was some hyperbole in that claim, but perhaps a HN
reader knows just how costly it is to fire an employee in France, for example.

------
Shivetya
odd there was no attempt to present solutions or show if any of the countries
were trying to find any.

Basic Income won't solve this mess unless you are willing to give up a lot to
get it. As in it won't be free, some benefits will go by the wayside as BI
will need to cover all your needs. I figure education will hit the block
first, get a job while on BI to prove you can hold one then you can get
schooling or more advanced trade skill training.

the problems with BI are many. politicians and such would have a difficult
time establishing how much is enough because even those who wholly exist on a
BI system would demand access or the ability to obtain certain items and
goods. the danger is establishing by government edict a permanent underclass,
appeased just enough to keep them from challenging the system.

likely to be better to incentivize hiring people by providing
discounts/paybacks/guarantees to employers to get the people in place

~~~
zigzigzag
In France at least, attempts to liberalise labor laws tend to cause riots. I
don't know about Spain or Italy but they have famously sclerotic labor markets
that never seem to get reformed. It's just not a priority of the voters.

Not sure what's going on with more liberalised countries like the Netherlands,
but consider the massive influxes of people from continental Europe to the UK,
which has relatively relaxed labor laws, and that may have something to do
with it.

Also, note that most of the people the article covers don't have any skills
worth talking about. They studied art history, social analysis, hotel
management and things like that. Such people would find it hard to find a
committed employer even in better times. The first example is a doctor, but
she suffers from a double whammy of regulation: not only labor laws but also
licensing that makes it hard for her to even relocate to a better run country.

------
maverick_iceman
Very similar situation persists in India where the section VIIB of the
Industrial Disputes Act says that a company needs government permission to lay
off people if they have 100 or more employees. As a result a lot of companies
never go beyond 99, giving up growth and employment prospects for a large part
of the population. Moreover, this creates a vast class of underemployed people
outside the protection of those laws, euphemistically called the "informal
sector".

------
maverick_iceman
In the US a lot of people are understanding why less coercive labor laws
ultimately end up benefitting the employees. That's why so many states have
gone right to work recently.

Edit: I would also like to add that I don't support mandating unions to
represent all employees. Just like an employee should be under no obligation
to join/pay dues to a union, a union should have no obligation to represent
all employees. It should be a voluntary association.

------
DiThi
Why aren't politicians making easier to hire people part time? It would
benefit not only the unemployed but also the employed that wants to trade part
of their salary with more free time.

~~~
ThrustVectoring
Not all capabilities are positive-value for the owner - being able to sell
your kidneys means that people will have an incentive to extort you into
giving up a kidney.

Also, letting people make the best decision for them isn't the same thing as
the best rule for everyone to follow. Tragedy of the Commons is the best
example for this - if everyone makes their best choice for how many fish to
catch, the lake gets emptied.

I really ought to turn the above two points into a detailed blog post aimed at
libertarians. (Libertarians make good points, too - generally they have better
policies than the ones they critique. These processes are some of the biggest
things that libertarians categorically ignore, though.)

~~~
yummyfajitas
In theory this is true. Is there major kidney related extortion in Iran, where
kidney sales are legal? What similar extortion do you see in other similar
markets?

Is there any reason to believe this is not a random, unsubstantiated fear?

~~~
michaelmrose
Where it's legal to sell kidneys I imagine people are presured by poverty to
make medically unsound choices surely this is bad enough?

------
brandon272
Seems like we go back to the concept of basic income, which Elon Musk recently
"doubled down" on:

[http://finance.yahoo.com/news/elon-musk-doubles-down-
univers...](http://finance.yahoo.com/news/elon-musk-doubles-down-
universal-175300665.html)

~~~
DamnYuppie
I think before we take that step we should explore an improvement in labor
laws that make it less undesirable to enter into full time employment
agreements.

~~~
brandon272
Yes, but it's still a race to the bottom. To make it "less undesirable" for an
employer to hire a full time employee simply means reduced compensation,
benefits and protections for said employees. "We won't hire you on a full time
basis because we need the flexibility to lay you off whenever we want and we
want to pay you less and offer you fewer benefits."

Do we really need to make employment as unpleasant and stressful as it can
possibly become before we accept the fact that some kind of basic safety net
is needed?

~~~
ptaipale
It's not exactly that there wouldn't be some kind of safety nets in Europe.
It's more that those safety nets become traps for some people.

We don't need to and we should not make employment unpleasant and stressful.
The point of this article was that the current system is increasingly making
employment unpleasant and stressful, and this is largely due to the dichotomy
of having either strongly protected, "permanent" jobs, or non-protected temp
jobs. The more protected these permanent jobs become, the scarcer they get.
Added regulation does not really help, it will just make even those temp jobs
more scarce as companies (and even government organisations) get more and more
careful about hiring because of the high stakes and big commitment you make
with the hiring decision.

Years ago, when I was freshly married and we had our first children, I was on
a string of temp jobs - all with the same employer. The company lost
significant markets, there were layoffs; the local union guy publicly said "we
should throw out those temp guys to protect the permanent jobs".

I did not like that, and I have somewhat distrusted the unions (including
mine, of senior salaried employees) ever since (even if I'm a member). One of
the things that makes life so stressful is that employment becomes a game,
something where you think you should manipulate other people and some
artificial criteria, and build relations and scheme, to keep your job.

It would be less stressful just to have what you call "race to the bottom" and
actually have a system where you try to do your job well and if there's need
for that job, then do it.

~~~
tormeh
>t's not exactly that there wouldn't be some kind of safety nets in Europe.
It's more that those safety nets become traps for some people.

You'd be surprised. Many of the southern countries have rigid labor laws and
strong family ties instead of government safety nets .

~~~
ptaipale
With "southern countries" you mean Italy or Greece, for instance. I know, I
know - you are right and I wonder why you're downvoted because what you say is
not silly nor offensive.

However, there the labour laws are in fact _more_ rigid than in the
"socialist" North European welfare states which have, in many ways, more of a
market economy. For instance, the policymakers in Mediterranean countries have
wanted to discourage laying off employees by increasing the burden to
employers about laid-off staff: you have to pay a year's salary or more to a
permanent employee who is laid off.

And, in the end not very surprisingly, particularly the youth unemployment is
exceptionally high in Greece, Spain, Italy and Portugal.

What is stupid that in North Europe, the unions, such as Finland's SAK, want
to have the same as in Italy. I guess there is no other plausible explanation
than populism and short-term power grab by politicians who don't really care
what their policies actually mean with all their side effects.

------
patmcguire
Some of this is due to regulations, some of this is the fact that they can now
get away with it. The market can be efficient in more than one way.

I will say that the concepts of year contracts are totally alien to me as an
American. But I think Europe still works on the old-school postwar model,
where you're horribly underpaid at the start of your career and the company
makes a bunch of money off of that, but over time you make more and more until
it morphs until a well paid sinecure. So they're just stuck at that horrible
entry phase forever and never move to the good part.

