Sweden's Job-Security Councils Make Layoffs Easier
theatlantic.com
theatlantic.com
Yes it is more difficult than in say the US but not that hard. You just must document over a period of months that the employee is underperforming and not improving; you can’t just fire them with no notice or warning. Most big corporations in the US work this way anyway as well.
You have to consider that for society it is very wasteful to have people live off welfare schemes rather than working. Even if you are not a high performance worker, it is better for society that you are working than staying unemployed.
And of course the documentation must include signs that they have been given any required to improve etc.
Depending on how bad it is, the deal settled with the employer will vary. If there is video of an employee sleeping on the job at the factory on severeal occasions, they will probably be let go without compensation. If the employee just complains that a worker is only half as fast as the guy next to him, there is no way the employer can let the guy go without compensation.
Right. The rules for layoffs are more or less that "performance" is not a valid grounds for firing someone. The reasoning here is that the employees performance is the responsibility of the employer, who has to provide management, training etc. An employee have to basically mismanage their job to the point where it's illegal to be possible to fire.
Now, you can always fire Joe because he's a slow worker- but the union will protest. He'll likely be fired anyway, but it'll cost the employer (Joe will get a years salary and leave). The rules are basically "First in first out" - and employers have to buy each exception. The same would apply when closing a whole branch/factory for example. The employer likely knows which 20% of staff they would like to keep around, but they will have to wrestle with the union for every exception to the order. It's usually well worth the money for employers to keep the good employees and let the worst go. In Sweden this is effectively the only way you can make the "stack ranking": you move a bunch of workers to a special branch or factory. Then shut down that product/factory/office. Then pay those workers a years salary or two to not come back.
So the solution discussed in the article is meant to make it easier for companies to change strategies e.g. by laying off entire branches. Such as banks closing offices now that most people bank online, or Ericsson shutting down all their factcories that made landline phone switches. It's not about the ease of firing individual employees.
A system for making labor laws less strict to make it easier to lay off individual employees is popularly called "Flexicurity" after the model used in Denmark. Basically, the worker collective would accept liberalization of the ordering rules in exchange for public safety nets being so good that being laid off doesn't really matter (Say e.g. 80 or 90% pay in unemployment benefits). This type of model has been proposed for Sweden, but it has never really been close to being implemented yet.
Stack-ranking has been horrible every place it's been tried so I'm not really sure how this is a bad thing.
From what I've seen in my time in corporate America, poor performers are often kept around regardless of if a union is involved or not for a variety of reasons:
* firing someone for performance is a hassle even without any union representation because HR requires careful documentation,
* for the manager, firing an employee for performance means admitting that you made a mistake on hiring,
* firing the person may put the budget for their salary at risk, and
* if layoffs were to happen in the near future the manager will need the person as a sacrificial lamb to protect the rest of the team (this behavior is greatly enhanced by stack ranking, to the point where people are hired specifically so they can later be marked as non-performers and let go in the next culling).
Stack ranking is one of the worst ideas to ever hit the corporate world, and is, in general, a sign that I probably don't want to work (as an employee, at any rate) for that organization.
Collaboration is so fundamental to software development, or any creative endeavor.
Stack ranking, however, encourages heavy amounts of back-stabbing political competition.
Even if the team performs well ahead of expectations, the bottom 20% of the team will still face consequences for the "underperformance".
This is the same sort of bullshit that killed Sears.
The numbers given the essay suggest that Sweden's employment rate is not unusually low, so is your comment really a meaningful basis for making a policy decision?
When it's easy to fire people, it's also easy to fire people for personally motivated reasons, rather than reasons which are good for the company.
For example, the boss might want to fire someone to bring in a family member. Nepotism isn't illegal. But the union contract helps prevent these sorts of (non-business related) firings.
People tend to work better when they aren't worried about being fired for reasons that have little or nothing to do with their job.
Let me rephrase - less willing to give someone a chance who may not have done well in the job interview.
> employment rate is not unusually low
Wouldn't that also suggest that finding another job won't be difficult?
> fire people for personally motivated reasons
Why would you want to work for someone that dislikes you and doesn't want you around?
> People tend to work better when they aren't worried about being fired
A workplace where people hate each other doesn't sound like a happy place, either.
Based on the information given, it doesn't seem like it is. Perhaps there are other mechanisms in place (like this job-security council) which compensate?
How would you expect the Swedish job market to look if employees didn't have these protections?
You ask: "Why would you want to work for someone that dislikes you and doesn't want you around?"
Here's an example from the blog of a small-town teacher I read. If you are a teacher, and coach Little League baseball, and the principal puts pressure on you to place the county education board member's grandson on the team (say it's from pressure from the board member), then who's going to back you if you refuse, and end up on the principal's bad side?
Or are you going to quit your job, uproot your family, and move away? Because it's likely not easy to find another teaching job in the same small town.
To put it another way, why is it that if 1 person dislikes you out of the 40 or 50 people you work with, and that person happens to be the principal, then you have to leave? Why does he deserve that much power over you?
I've been an employee, and an employer. As an employee, one feels that the employer is holding the power, being an employer, one feels the employee has the power. After all, the employee can quit at a moment's notice and go work for someone else. Good employees are hard to find.
In a private institution the person paying you money to do stuff for him deserves the power to stop paying you money because it's his money. It's also the employee's ability to make contracts that you're talking about -- you'd hinder an employee's ability to agree to a contract with a lower risk of employing them.
I happen to find it convenient to be able to agree that if somebody doesn't like my output they can stop paying me. It's part of how I get them to start paying me in the first place. You would take this freedom to make contracts away from me. Presumably because you think you know better, and by taking away my freedom, you enhance my negotiating position.
Why do you deserve that much power over me?
"In a private institution the person paying you money to do stuff for him deserves the power to stop paying you money because it's his money"
Yes, I believe one of the "other mechanisms in place" in Sweden compared to the US is that Swedish workplaces are more structured around consensus and democracy, while US workplaces are more hierarchical and control-based - a sort of mini-monarchy.
"I happen to find it convenient to be able to agree that if somebody doesn't like my output they can stop paying me."
I believe Swedish companies can fire people who are unable to do their job. The question is, do you find it convenient that you can be fired for reasons which have nothing to do with your job? The Little League example is one. How do you feel about not being paid because your boss wants to hire a poorly qualified relative instead? Or not being paid because you refuse to work on weekends?
"You would take this freedom to make contracts away from me. Presumably because you think you know better, and by taking away my freedom, you enhance my negotiating position."
I did not understand this argument. What essential freedoms are taken away from private Swedish companies or from employees in Swedish companies? How has this had detrimental effects on the Swedish economy or lifestyle?
We can't separate this from being fireable for being bad at your job, or for making others hate going into work because you're insufferable or a sexual harasser or just undesirable to work with.
> How do you feel about not being paid because your boss wants to hire a poorly qualified relative instead?
Perfectly fine. It's his money. If he wants to spend it unwisely, he's welcome to. And I'm not "not being paid." I'm "working for somebody else."
> Or not being paid because you refuse to work on weekends?
That's not the matter under discussion. You can already sue over not getting paid, or you can work somewhere else if they want the deal changed.
> What essential freedoms are taken away from private Swedish companies or from employees in Swedish companies?
The freedom to agree, "You'll pay me money to work for you and either of us can terminate this agreement at any time."
The ability to freely partake in economic activity is essential.
> How has this had detrimental effects on the Swedish economy or lifestyle?
See the inability of immigrants to integrate into the Swedish economy and Swedish society.
After all, these laws also limit your freedoms in the sorts of economic activities that can be done at work. If that's the case, then I consider your views too idealistic and unsuitable.
And I've read the EEOC guidelines. There are many precedents which show that being a sexual harasser is separable from being "just undesirable to work with". There's no bright and clear line, but if that's what you require than you demand the impossible.
You also don't seem to understand why some people would rather be an employee, and not simply be a contractor. Many people want a longer-term, more stable position, the ability to influence work conditions, get respect, etc. and as jernfrost pointed out at https://news.ycombinator.com/item?id=15578545 lack of these factors will cause resentment and disloyalty, and people will "tend to give less shit about their company because they know the company is never there to have their back".
In order to judge "the inability of immigrants to integrate into the Swedish economy", what factors do you use to compare it to the US? Because I seem to recall a lot of integration problems in our own history. And hasn't Sweden taken in a lot more refugees recently than the US has? I heard many US politicians who didn't even want to try to integrate Syrian refugee orphans. I think that has to count in the negative column.
I don't think it is without reason that when American companies fire people, they are not allowed to be around and get all their stuff in a box to not sabotage the company. Such practice is evidence of very weak mutual respect, trust and loyalty.
Ultimately that is a bad way of running an economy. You incur very high transaction costs in business when trust levels are low. I've seen this myself when American companies have been involved in buying Norwegian companies. American companies are completely overdoing it when it comes do due diligence, writing contracts and involving lawyers. This represents a huge unnecessary cost.
This experience is not unknown to others as well. You can read about Japanese experience with American work life. They are also used to a model with high degrees of loyalty. I read about a Japanese company trying to run the Japanese way in the US. They hired people for modest salary because they used lots of money on training to get very skilled employees. The problem was that this model was impossible in the US, because as soon as employees got the skills they switched to a higher paid company, which offered no training. The Japanese company did not understand how to build skills in the US. And rightly so. That is a big problem in the US. A huge part of the population have very low skilled jobs because it is very hard to raise the skill level of employees in the US, when you don't have a high chance of retaining those workers.
Of course there are pros and cons to both approaches. Norwegian and Japanese companies are more likely to keep unproductive workers as you say. But seen from a holistic view, for society as a whole that must be a better approach than producing lots of homeless people, or people living off welfare.
Unfortunately, all it takes is one bad actor to ruin it for everyone, and the company then goes "have security escort him out" from then on.
> But seen from a holistic view, for society as a whole that must be a better approach than producing lots of homeless people, or people living off welfare.
Easier firing of less productive people leading to homelessness / welfare would require it to be impossible to get another job. That seems a stretch.
If the company accumulates enough unproductive people, it goes out of business and everyone gets dumped on the street.
How is it that Norwegian companies haven't yet had one bad actor?
"If the company accumulates enough unproductive people"
Norwegian companies can fire unproductive people. Just because it's easier to fire people in the US doesn't mean it's impossible to fire people in Scandinavia.
He told me a story about "more choosy" from another viewpoint.
His department got a new department head, who previously had been working in a US branch of the company. He wanted to increase the department head count, so they started the hiring process.
One of the candidates came through. The employees almost all thought the candidate was unqualified. The department head disagreed, and wanted to hire the employee anyway. The union intervened, and the candidate was not hired.
As you say, "A workplace where people hate each other doesn't sound like a happy place, either." Why should the boss get to choose who you are going to work with?
Maybe this is why the "share economy" is so popular lately.
The report doesn't lead me to that conclusion.
Of course, there's always going to be friction in changing staff. But increasing the friction should be approached with caution.
I'm pretty sure that Swedish companies employ contractors for this situation, just like US companies do. And as the article point out, Swedish companies can have massive layoffs if need.
I really feel like the negative effects you are thinking of are not, on their own, significant enough to use your model to guide policy decisions. Perhaps the Swedes have given it sufficient caution?
By the way, one example I found of short-term contract work in Sweden is as a temporary replacement for when an employee takes a year off for paternity leave.
There never is a "free lunch" in these sorts of things. The cost gets paid one way or another.
How much lower? 0.5% or 50%?
How much of a paycut are willing to accept in exchange for longer-term stability? (Are there jobs in the US with two employment options; one with job protections and the other without?)
How does it compare to other factors which affect salary? As has come up on HN before, salary in Sweden and Norway are public information. This is meant to reduce information inequality during salary negotiations. (Eg, it would have been more difficult for Goodyear to have systematically underpaid Lilly Ledbetter had she known her market worth.)
Obviously there are other differences as well, like the effect of employment-based insurance vs. national insurance.
I've been an employer. I know for a fact that I'd think twice, three times about hiring somebody if I knew it would be hard to get rid of them if they don't work out. (Such as a requirement to document the poor performance would be - that can take months.) I also know I'd make a lower offer. You would, too, if it was your money paying their salary.
I know that I am not alone in thinking this.
You have pointed out one factor. Others, including jernfrost's account of Norwegian conditions, have pointed out that there are many factors. I've specifically argued that your observation is not significant enough to set policy decision. Now you agree that there are many factors, so do you agree that one point that you bring up might not be a useful one?
You give your experience in the US workforce, but your original observation concerned how you thought it would affect the Swedish workforce, with the implication that it was a significant universal principle.
That's true in theory, and I agree that it is a factor, but there also are many other factors involved in hiring/firing decisions.
Also, it's not much benefit to a worker to be hired and fired with regularity because it's easy; people are not commodities, to be traded, moved or bought & sold like dollars or widgets. Finally, workers need to be able to protect themselves from unscrupulous employers. So the question is, how do we find a balance?
As far as public interest goes, I'm not interested in making corporate executives' jobs easier or in making corporations more profitable; I'm interested in people having good jobs and being productive. Corporate profit, job market liquidity, etc., aren't bad, and profitable corporations are necessary for good and productive jobs, but they are a means and not an end.
(Speaking from experience from tech industry in Oslo, before I moved on)
Also why depending a lot on more on easier to let go contractors are prevalent all over Scandinavia.
People (in tech) don't hang around the same company for too long either, even when someone who doesn't know anything gets a cozy job some company is going pay them better for another cozy job.
They called every one to a meeting said where bankrupt you don't have a job and there's a pile of RB2 forms over there. Th Rb2 form is to claim the much reduced redundancy payment from the state, when the parent company could have paid the statutory redundancy out of petty cash
I understand that return on investment is important, but corporate profits are overall higher than they have ever been before. When is enough enough? When should we start to again prioritize the quality of life of our workers?
edit: To those downvoting me, could you please explain the flaw in my logic? I don't see what's wrong or inaccurate with either of my comments.
Yet we do get to say. A big cause of the political instability in the US is due to increasing inequality and a declining quality of life for much of the country. If such economic forces cause protectionist legislation to be passed, isn't that the people getting a say?
Also, the idea that you must jump on the global capitalist bandwagon to remain relevant is odd to me. Is being an economic powerhouse the only factor in a country's relevance?
I mean it's easy to say 'inequality' as some kind of Marxist trump card that you think automatically ends all possible debate, but meanwhile things in the US are fine. Fine != Perfect, of course, but it is yet to be demonstrated that you can have a socialist/market capitalist welfare state that functions outside of the Nordic countries. Every other attempt at it has been a complete disaster.
The election of Trump and the near-election of Sanders.
They are signs that a huge chunk of the population is discontent with our political system and with the direction of the country. A history of collapse isn't required for there to be instability in a nation.
> it is yet to be demonstrated that you can have a socialist/market capitalist welfare state that functions outside of the Nordic countries.
I didn't say that's what we should do to solve the problem, merely stated the fact that worker protection laws are important, then questioned when return on investment should supersede quality of life. A socialist welfare state wasn't involved in the 1930's when inequality declined in the US, which is proof that things can change without such systems.
I worry that if we don't do something about the growing discontent among our lower and lower-middle classes, they'll continue electing populist candidates until someone truly dangerous gets elected, and I feel that correcting the inequalities caused by globalization and the strong dollar would be a good place to start.
I suggest you don't get caught up in the hype. The current period is actually extremely placid compared to many in the course of our history. Just because Trump is really dumb, and that people voted for someone really dumb, doesn't make things 'unstable'.
If anything Trump's term so far has been a case study in what a stable system looks like. He can barely implement any policy and has yet to get any legislation passed. In the meantime the government seems to be functioning, checks are being mailed on time and the military is still under civilian control and is 100% loyal.
I mean what sort of scenario do you have in mind (if any) of how this 'instability' would play itself out? Generally the biggest threat to democracy isn't "electing someone that everyone thinks is stupid and has negative charisma, during a peaceful time with few major problems" it's the opposite, someone super charismatic during a time of extreme danger.
I would say that electing Clinton would have been a far greater symptom of something deeply wrong. Not because of her personally, but because it would have been the second time in 12 years that we elected someone who was in the nuclear family of a previous president. Oligarchy destroys democracy, an incompetent leader is just someone we put up with for awhile (and we have had plenty far worse).
I think Trump would have lost by double digits if Biden had run, and he would have lost handily if Bernie had won the primary. It almost goes without saying that a hypothetical Trump vs Obama election would have been a bloodbath. There are probably half a dozen establishment democrats that would have beaten him easily. However, they didn't run because the Clinton machine was actively threatening anyone who didn't get in line for years ahead of the election. THIS is what destroys democracy, the ability of powerful families to perpetuate their power and influence. That Bernie did so well says very little about him, and a lot about how well anyone would do running against Hillary Clinton, a candidate that a sizable majority of people dislike and believe to be a liar. Frankly, Clinton is probably one of the only people in the country that Trump would have won against.
Anyway, the point of all that is to say that Trump didn't win because of discontent or something that made him popular, he won because the Democrats nominated someone who is not electable. Trump was never popular, even on the day he 'won' the election.
Had that system delivered their preferred candidate they would have been perfectly satisfied with it, and we all know it.
We see it here in the UK, the LibDems are forever trying to monkey with the system in ways that, by pure coincidence, would favour them. We had a referendum on PR which they lost. Had they won it, in the 2015 election UKIP with their 4 million votes would have been a decisive force in Parliament. Then suddenly all the PR freaks went very, very quiet...
You can't sit back and wait for companies to behave. You got to push for political change in your country. Strong unions combined with laws protecting them is one way of making sure companies play by the rules.
I can tell the same story about foreign workers in Norway. We got lots of polish and other eastern European workers to the Norwegian construction industry.
These workers were treated much worse than Norwegian workers because they 1) didn't know their rights 2) were not union members. After concerted efforts by the Norwegian unions to inform eastern European workers, create information material in polish etc, then conditions started improving a lot.
It is not an accident that Nordic workplaces are quite nice and the unionization rate is close to 80%.