Which is why many companies don’t hire many people in France
http://www.nortonrosefulbright.com/knowledge/publications/14...
http://www.nortonrosefulbright.com/knowledge/publications/14...
When there's a financial problem, there are multiple differing opinions as to what's reasonable.
But if you want to call the US the "only developed place without reasonable worker laws", you might want to consider Denmark. Because they don't have the opinion you're propagating.
The personal income tax rate averaged 60.45% in Denmark from 1995-2018.
Those are some of the most expensive "free" hospitals and universities I've ever heard of.
Also, the tax is more complicated than simply throwing out 60.45%. It goes:
- From 0 - 50,000 you pay 0% tax - Everything above you first pay 8% work market tax, and then from the leftover you pay - the amount you earned above 50,000 - 498,900 is 37% - the amount you earn above 489,900 is taxed 52,2%
So you don't pay 60.45% of the full amount. Never. You pay progressively as you go up.
Monthly that'll go something like, deduct 5,000 form your paycheck, deduct 8% of the remaining amount, and then 38% of the remaining amount of that. Now, what you have left is the remaining amount + the 5,000 tax free. And of course a bit more of the amount if you go into the top tax bracket.
Employee protection regulation absolutely is problematic in France, because it over-protect relatively small groups at the expense of everyone else.
Small and medium-sized businesses are most affected by this. The transition from 40-ish people to 200-ish people is where the system really breaks down for French startups, because you are too big to benefit from the early-stage incentives, and not large enough to have political clout and bend the rules.
For a 100,000 euros income as a sole proprietorship, I paid 42% altogether. From those 42%, 7% were income tax, the remaining 35% were Charges sociales which covers healthcare, unemployment and retirement benefits. When French people complain about high taxes for hiring, they complain about the Charges sociales.
When ones is employed, most of the charges sociales are paid by the employer so do not come out of the employee salary (but it's the same in the end).
Honestly, it's not as big a problem in tech where wages are quite a bit lower than the US to account for the high charges sociales. But for smaller companies hiring low skilled labor or for jobs that are traditionally less paid (customer service, etc...), then it is rather high.
And to add insult to injury, the organisms that are charged with collecting those charges sociales are a complete clusterfuck. For the same year, they calculated 3 different amounts and none matched what my accountant had calculated. Closing down the business and getting out of the RSI's list took 2 years and repeated letters.
That said, I do agree with you regarding employee protection. Those regulations are helpful and should be there but there's a balance to be had between both extremes. It's the same with renter's protection in France which are way too biased against landlords and also create a lack of available apartment (coming back to France after living abroad for multiple years meant that I didn't qualify for the new unpaid rent insurance the government created and locked me out of a third of the apartments in the city I wanted to live.
Of course effective tax rate is much lower than marginal tax rate. Effective federal income tax would be 17.1%, effective California income tax would be 6.9%. This would make effective total tax 40.2% (it was 42.6% in 2017, before Trump's tax cuts).
It’s true that California taxes are high. But it’s also true that France taxes are higher. And, to be fair, bring with them higher entitlements.
And I maintain that taxes are just not high enough to be a major obstacle to entrepreneurship in France - and yes I am aware of the dreaded "charges sociales". The reason we hear so much about them is because complaining about high taxes is easy and not controversial. Unlike the topic of employee protection, which is deeply polarizing.
And I very much doubt that availability of qualified hires is the obstacle either since the level of engineering Grandes Ecoles is quite good (I might be biased there)
So, I guess factors for why France is not doing that well re startups would be Employee Protection, Kafkaesque bureaucracy when dealing with creating the company and paying the said Charges Sociales and lack of capital.
I suggest that people who aren't familiar with Australia's labour laws have a quick look at https://www.fairwork.gov.au/. There are some problems, but it gives you an idea of practical alternatives to at-will employment.
Main relevant takeaways:
- Unfair dismissal legislation preventing employers from terminating employees unless they were grossly negligent, malicious, or didn't respond to performance management.
- Unfair dismissal claim protection for small businesses provided they can show evidence of following a (very short, fair, and easy to read) code with regards to the employee's termination.
It's extremely hard for me to empathise with business owners who openly have issues with these protections. At the very least, it's apparent that this dismissal wouldn't stand in Australia, as it shouldn't. Executives dismissing a support employee—out-of-touch executives who have probably forgotten how important an ongoing income stream is for people on low or even normal incomes—just to save face in a business relationship is in my opinion unjustifiable. Regardless of your view on labour laws I think most people agree on this.
Not if the other option was China shutting down a bunch of Marriott hotels and hundreds of employees losing their jobs instead.
They specially stated the false dichotomy, and made a strong argument.
No one here knows if the other option has to be Marriott losing business, so you putting that out there is wrong, and ironically, again a false dichotomy.
I was responding to this point, which is specifically about the Marriott case.
>Executives dismissing a support employee—out-of-touch executives who have probably forgotten how important an ongoing income stream is for people on low or even normal incomes—just to save face in a business relationship is in my opinion unjustifiable.
>Not if the other option was China shutting down a bunch of Marriott hotels and hundreds of employees losing their jobs instead.
to which I said we don't know, and you saying so is a false dichotomy because there are often other options.
Or they didn't have to fire anyone - it's not like China actually gets to see employment records for random staff in Omaha.
If Marriott was forbidden by law from firing the employee in this situation, then they could much more easily deflect the pressure from China. Make some token gesture and then say, hey, we'd like to do more, but those pesky laws prevent us from doing that.
This is a case where everybody wins when there's stronger employee protection.
How's the NFL doing?
So I prefer the direct approach that is known to work by directly helping people do the right thing, over the indirect approach that may or may not work, depending on circumstances.
Which is? Decide for them?
Hint: it isn't, we just have sensible protections against wrongful termination.
I prominently tell companies why they don't get my business, and Marriott will hear from me next year when I call, waste their time gleefully explaining how I might have used their services but they fired a guy to kowtow to China.
Even better, this is gold on his resume.
In the US we don't pretend we are smarter than other business owners. The socialism route of adding regs to "fix" regs is self defeating. Treating people like fools makes them fools eventually.
This assumes a definition of 'functioning market' that not everyone agrees on. In my view the market and the government serve the well-being of the general population. The US is starting to fail miserably in that area, because income inequality is pretty bad and has steadily been growing since the 1970'ies.
https://en.wikipedia.org/wiki/Gini_coefficient#/media/File:G...
https://www.cia.gov/library/publications/the-world-factbook/...
Moreover, the influence of industry lobbying in the US had become enormous and paralyzes democracy. Of course, the industrial complexes and part of the government keeps up the fairytale of 'the US is a free country, if you don't make it, you are not working hard enough, the market is self-regulating', because it is convenient for them. As long as people believe this, they will not object to having no rights and no decent income. If you are a random person, the opportunities of building up a good and secure life are much better in Nothern and Western Europe.
tl;dr: not only the government needs to be kept in check, also the market. Otherwise big companies dictate the policies.
The US society and politics are way too heavily tilted towards the employers, the people who already wield an disproportionate amount of power over their employees.
If you actually take the time to voice your displeasure over situations like this, you are an extreme outlier. Most people don't give a shit, and even fewer will even hear of stuff like this happening. Even if they do hear about it, they'll forget in a week or two.
In the end, nothing will actually change. Employers will still exploit the employees for profit, and fire people for absolutely no reason at all, while making potential new employees jump through ever more hoops in the desperate hope for a job.
That is a contradiction, the entire point of a company is to make a profit by providing consumers with something they are willing to pay for. Use all the derogatory words you like, in this case "exploit" seems to mean "employ" (which is pretty odd btw), and "no reason at all" seems to mean "like a tweet".
It's a self regulating system, that's capitalism. Marriott screwed up, and now it's on their permanent record. I'm sure they just lost my business, if I use history as a gauge, and assume I live until I am 90, that's high 4 to low 5 figures in today's $'s.
Do you write down and keep track of all your personal boycotts? Do you check the list every time you make a purchase or pay for a service? Sure, if you're like me, you remember stuff like "Nestle wanted to privatize clean drinking water for profit" and "Coca-Cola paid hitmen to assassinate union leaders", and avoid those companies. But "Mariott once fired a guy for liking a tweet"?
Yeah, no. You'll forget soon enough, just like everyone else. And companies like Mariott are counting on it. I know "the Internet never forgets", but that doesn't matter when it's soon drowned out by a million times more random informational noise. It'll stick around, alright. But only as some random mariottsucks.org website, or as a long-forgotten Facebook group.
They fired a guy for accidentally clicking like on a tweet. If the consequences for that action are so severe, why is it even possible in the situation he was put in? Was he briefed ahead of time that his employment was hanging by a thread, pending a single misclick? In any sensible system, he would have been called for a brief talk with his immediate superior, where he would have been given a warning and explained why it was necessary. He certainly wouldn't have been fired outright for something so minor.
Capitalism self-regulates for maximum profit to the fat cats, maximum work effort squeezed from workers for the absolute minimum possible pay. That's why unions are needed, to balance out the power of the employers, through collective bargaining and solidarity.
Yes, some guy whose entire job is to field customer complaints will listen to you and then hang up the phone and not report your complaint to anyone.
Is an employee allowed to quit? What about the "violence" it does to the company, investors, and fellow employees? Must they stick around to provide continuity? If so, how is this not indenture?
Am I allowed to fire a painter I hire to paint my house if I think he does poor work? Do I need to document his performance and discuss an improvement plan? Does this change if I own a house big enough to keep him painting for a month? For a year?
Employment represents a contract between two parties. Basic freedom of association and contract law means both parties can enter and leave under the terms they negotiate and have a rational self interest in acting in good faith.
Grotesque. Many industries in various countries have a reasonable notice period (say, 3 months), which should give the company enough time to adapt. Nobody considers this "indenture".
> Employment represents a contract between two parties. Basic freedom of association and contract law means both parties can enter and leave under the terms they negotiate and have a rational self interest in acting in good faith.
The difference is that one party, most of the time, can manage without the other. On the other hand, the fired employee still needs to pay rent/feed his family. And depending on the economy/location, finding a different job might take some time (if it's possible at all without retraining).
I've always found two weeks notice to be more than adequate in most cases and then, only as a courtesy to communicate, transfer in flight work, and alter schedules. If I'm truly mad, I'm resigning and dealing with picking up the slack is not my problem. If an employee tells me they're leaving, I want them gone soon anyway because mentally they've already left the team.
Aside from Unions, there is no way of protecting employees where they are interchangeable cogs. Unions have their own problems, but collective action is a pretty good deterrent against 'unjustified' termination.
It is not uncommon for smaller employers to fire a manager, and hire a new supervisor though. Same job - different title.
I'm unsure if it's been challenged at the FWC - I doubt it would stand.
So if you're reducing the number of staff employed to support "system A", but you have vacant positions supporting "system B", then you you need to offer those positions to any affected staff, or show why those employees would not capable of doing the new job.
On the other hand I see a lot of refugees trying to get to Germany and Sweden which have at least the same if not stricter labour laws.
Reading your comment I feel that you live in a really strange bubble which allows you to think like you do.
And yet people want to get here so bad they illegally stream over the border by the millions.
> I see a lot of refugees trying to get to Germany and Sweden
It's a lot harder to walk from Europe to the US.
https://en.m.wikipedia.org/wiki/List_of_sovereign_states_and...
http://www.un.org/en/development/desa/population/migration/d...
America has historically been the country most people go to.
Though this was till 2016, so I wonder if it's changed.
[1]: https://www.weforum.org/agenda/2017/11/these-are-the-countri...
I have launched international hiring processes for PhD studentship positions at my lab. More than once, I have had good candidates who ended up rejecting an offer and going to the US instead because their universities have more prestige.
Sometimes the convenience of these decisions for them was, let's say, highly questionable (although I really hope I'm wrong and wish them the best of luck!). For example, a person from Iran who went there to first be hit by Trump's travel ban, and then the graduate student hike. Here that person would have had a good salary, enough to live well, and no such worries. And even though my university as a whole is ranked worse that the university they ended up in, my group/lab is better on any metric.
I have also had a candidate from an Asian country who really wanted to come here, but their parents wanted their child to go to a "prestigious US university" so they didn't let them.
I do think that if you ask in Europe, almost no one wants to go to the US. At least that's my experience. But in other areas of the world the inertia of the US's reputation is strong.
One interesting thing about France and Australia is that by the Ease of Doing Business Index over the last decade, France is gaining on but still behind Australia. (FRA: 44 -> 31; AUS: 6 -> 14).
So suppose we agreed France was performing worse economically than Australia over the last decade. Then we might conclude that absolute position matters and liberalization is important. Or we might as likely conclude the complete opposite, that gains on the index don't matter and liberalization isn't important.
And that's not even bringing the Economic Freedom Index into things, which has a radically different ranking based on similar criteria.
It's almost as if a lot of of what people believe about economics on both sides is under-determined by the available evidence.
But eh, maybe that's too cynical. That's just two countries. I'd really like to see some data analysis on how much "ease of doing business" (or some similar metric) matters to GDP--and maybe also to surveys of feelings of job security / satisfaction as well. Looking across most countries, maybe hard patterns would emerge. Or maybe economics is all noise unless you're at Weimar levels of malfeasance, who knows.
South Korea, Georgia, and Macedonia have skyrocketed up the EoDB chart, so I guess for any of us who suspect there's a sufficiently strong link, we have an opportunity to put our money down.
I was intrigued by this and decided to have a look at the figures and I can't find anything to support your statement. Where do you get your information from?
From Business Insider graphing OECD figures for the number of people per 1000 who take antidepressants shows France to be 50/1000 which is 16th from the top.
http://static3.uk.businessinsider.com/image/56b381f7dd0895c4...
Directly from the OECD site is a page showing the dose consumed per 1000 people. It's very similar to the above, possibly the same data source but they are supposedly measured in different ways.
https://asset.keepeek-cache.com/medias/domain21/_pdf/media23...
They both show France uses a lot less than many other countries,less than half Iceland and bout 2/3rds of the UK, Sweden, Canada and Australia.
In this particular case, if the man wasn't trained appropriately to handle international PR while doing so, the wrongdoing lies with the company.
The article itself seems to adopt a certain attitude that I really dislike. For one, I don't believe that the employee clicked accidentally. It really sounds like a lie. Then the arguments alternate between "it's not my job" and "Why should we care about China/other countries? Why should just tell them to f-ck off!". The truth is that both the US and the company seem to have an opinion. The employee, either due to negligence or ignorance, broke that line, and the company faced a backlash. It's not like China is exceptionally evil or something. I hate people trying to vilify entrire countries and politicize everything. It sounds like the author is just looking for a reason to bash China.
Imagine that you are a startup in France, with long-term employees, and suddenly you realize you screwed up, and you have to cut your expenses in half. Today, that means your startup is dead and all employees are screwed, but in the US, your startup continues with a much lower valuation. Which is better for the worker? There is no right answer, but in France, there's a startup-killing answer.
I personally love working on new, potent ideas, but this is not a viable model of development for society. "Gig economy" is getting out of control, and it's better to kill the startups than to let people abuse the legal loopholes they require.
If you cannot provide a certain minimum of employment time, you shouldn't hire people. As for short-term contracts, they were misused a lot post-2008, but the situation is much better now and most people won't work under such contracts.
If they need something done and they can't guarantee long-term employment, they can buy commercial services for what they need. Engineering firms and temp offices will be happy to send you a secretary, a software solution or a CAD file with what you asked.
It's really not your business what other people freely choose to do with their time. Nobody makes anyone work at a startup.
Check out "The Innovator's Dilemma" by Christensen. Innovation doesn't come from established corporations. It comes from startups.
Out of curiosity, what criteria are you using for "top companies"? Looking at the top 10 of the Fortune 500 (http://fortune.com/fortune500/) and their founding years:
1. Walmart (1945)
2. Berkshire Hathaway (1889)
3. Apple (1977)
4. Exxon Mobil (1870)
5. McKesson (1883)
6. UnitedHealth Group (1974)
7. CVS Health (1964)
8. General Motors (1908)
9. AT&T (1983 as AT&T, 1877 as Bell Telephone)
10. Ford Motor (1903)
By market cap (2017, first quarter) (https://en.wikipedia.org/wiki/List_of_public_corporations_by...)
1. Apple (1977)
2. Alphabet (1988)
3. Microsoft (1975)
4. Amazon.com (1994)
5. Berkshire Hathaway (1889)
6. Exxon Mobil (1870)
7. Johnson & Johnson (1886)
8. Facebook (2004)
9. JPMorgan Chase (1871 as J.P. Morgan & Co)
10. Wells Fargo (1852)
I'm not listing these as counterfactual, but only as an example. I know there are different ways of measuring "top" companies, and these are two. It's also arguable that these don't capture the idea of "top innovators". I'm interested in knowing what you're using. I'm probably missing something obvious.
https://en.wikipedia.org/wiki/Berkshire_Hathaway#History
Notably absent from the list are behemoths of the past, like RCA, Kodak, Sears, IBM, Ford, GM, US Steel, Union Pacific, etc.
Having a long-term contract where you can be fired at-will any day is effectively the same as cumulating short-term contracts, so instead of a lot of people on short-term contracts, you just have everybody (100%) on short term contracts.
I, personally, have a limited ability to be a part of a protected class, but that appears to work out ok for people like me. I've been fired once, and I got a better job as a result.
I'm not sure that's the way it works if your a 49 year old customer care agent from omaha.
This creates an underclass of people who are unable to buy their own house because of the employment situation
A lot of American workers are on short-term contracts, too, for nearly the same reasons.
> Imagine that you are a startup in France, with long-term employees, and suddenly you realize you screwed up, and you have to cut your expenses in half. Today, that means your startup is dead and all employees are screwed, but in the US, your startup continues with a much lower valuation. Which is better for the worker? There is no right answer, but in France, there's a startup-killing answer.
The risk that it will go out of business is part of working for a startup. It doesn't make sense to punish the rest of us to save a handful of startup employees.
You dismiss employees equivalent to half of your expenses on economic grounds, and after the appropriate notice period (1 month for employees with 6 months - 2 years tenure [1]) you now have half the expenses.
If that's not fast enough, I doubt your startup would have survived for more than 2 months with an instant layoff.
That works great until the next time I am interviewed by French TV about why the EU doesn't have as many startups as Silicon Valley.
When you do get interviewed by French TV, I hope you won't pretend like this is a single-cause issue with a simple fix.
I'm french. I can't speak for sure about other EU countries, but I can speak about France.
The REAL and main reason why tech startups are less frequent here is cultural.
In France we have a HUGE problem with elitism & a widespread negative attitude toward anybody who tries to innovate/change/make things. It's a pervasive problem, I've been MANY times hit HARD by that problem. Initiative is strongly discouraged (even if most people will claim the opposite): no matter what you do, a LOT of people will immediately give you _negative_ critics of all kind, sometimes mind-bogglingly stupid: "it'll never work", "that's not a good idea", etc. The more clueless they are, the most aggresisve they are about it. It's really hard to be motivated in such an environment, and of course it also has a direct impact when you try to find funds or associates...
Also, many people, especially the managers & the elites only see the BIG companies as being worth anything, despite the fact that small to medium businesses make the majority of employment & create the most value.
Add to that the HUGE problem that managers and all the elite (politics, leaders, whatever), salespeople, and many others, have an extremely TOXIC attitude toward people who DO THINGS. For instance I was given shit many times because while being a team lead I was involved in the programming part. To them, a manager does NOT get his/her hands DIRTY. Which is stupid of course and explains a LOT of the problems we have here. And trust me, this goes very far, there is a real CONTEMPT toward people like me, who are the ones who build the products & services that bring all the money. I've been mocked to my face because of that by people (sales & managers) who have no clue about how to manage a project, a team, and even less a programming project... (And I've worked on HUGE telecom projects, not a couple of PHP pages). Same goes for everybody in my family, who are mostly scientists/engineers. This in turn creates a big dissatisfaction -or worse- in the people who are in the trenches, creating an awful "us versus them" mentality that kills productivity & often creates a very bad work atmosphere.
And don't get me started about the awful prejudices against programmers (and everybody involved in computer projects). It's REALLY bad! So bad that I regret choosing that field. Here also there is a huge contempt & all the ridiculous prejudices that you probably know about nerds, programmers, etc. (Of the hundreds of developers/SE I've met, I can count on the fingers of ONE hand the ones who somewhat fit the stereotypes, and those were people with severe mental issues, something not related to the job). Another BIG problem is the "programming is easy" B.S. This leads many managers to think that they can replace experienced people like me with cheap beginners, sometimes in foreign countries, with disastrous results (as I wrote above, I worked in BIG projects, with crushing responsibilities, not the stuff that beginners can handle by themselves even if they are good which was not the case because being cheap, they were not the best, not by a long shot).
The huge bureaucracy does not help either, but it's not the most important issue.
In case someone points out the few recent initiatives to encourage startups in France, let me repeat what I just wrote: the fundamental issue is ATTITUDE. Until we can fix that, everything else is basically useless.
China isn't. The Chinese communist government is, though.