Look at the results of the law--not the intentions. The article says France has 2.4 times as many companies with 49 employees than with 50. This labor code is preventing companies from expanding, and encouraging companies to create new jobs in other countries rather than in France. The effect it is having is to protect existing jobs at the expense of new ones, and is an overall net drain on the economy.
If they, as a society, have decided they want a social safety net, why not work on something like a guaranteed minimum income or a negative income tax system instead? Give them the money directly so the costs are transparent instead of this roundabout regulatory nonsense.
The can't-shed-employees meat of the article is:
Software maker Viveo Group, an arm of Geneva-based
Temenos Group, began the required talks with the workers’
council in February 2010 because it wanted to cut about a
third of its 180-member staff, according to court
records. Viveo offered employees a voluntary departure plan
in June of that year as the council dragged its feet on
evaluating the earlier proposal, court records show.
The workers’ council then went to court to block the
cuts. It won a ruling against the original plan in January
2011 on the grounds that Viveo was forecasting an
18 percent increase in sales, meaning its future didn’t
depend on the layoffs. France’s highest appeals court is
reviewing the decision and is expected to rule on May 3.
“What holds back hiring in France is the lack of clarity
on how to legally cut jobs,” says Déborah David, a labor
lawyer at Jeantet Associés in Paris who has followed
the case. If the decision is upheld, Viveo will have to
take back the workers and hand over two and a half years
in back pay, she says.
If they were great, skilled employees regretfully laid off out of economic necessity then why not hire them back now that business has taken a turn for the better?
The answer would seem to be that the company was not honest about their reasons for the layoffs. Either they used an excuse to rid themselves of undesirables and low-performers or they used the economy as an excuse to fire otherwise fine workers.
It happened to me and I have no hard feelings about it at all.
Without the requirement that 49-worker-plus enterprises have worker councils, most employers would squash them if at all possible, and there would be no one to negotiate humane layoff terms for the people being jettisoned.
I don't understand why a severance package should be something subject to negotiation.
Write a law with a very simple function of years of service, pay and age and let that spit out a number. Done. No time and money wasted negotiating, employers and employees know what they're getting.
When I was let off in 2009, I basically wasted 4 or 5 months at my old job waiting to get fired because the law required that much time for a collective termination. The outcome of that "negotiation" was not different than it was at day one, so I just don't get it.
Obviously the law is producing unintended consequences if France is full of 49 person companies who only exist to skirt some regulation.
This is why I say the effects matter not the intent. The effect is--companies are expanding less and hiring less workers.
Whether that is caused by greed or not is moot. If the law didn't exist the companies would expand, since it does exist they won't. The motives of the company are irrelevant.
The end result of this law will be less economic growth for France. If the desire is to build a social safety net, why not tax some of the extra economic gain that will result from fewer labor regulations and give the money to the people directly?
The greed of the company owners/directors/management is preventing them from expanding
You're saying the same thing, but blaming different people. But keep in mind that economic systems that blame owners of capital for everything, and place extraordinary burdens on them, have not historically been very good economic systems.
AFAIK, that's how they do it in Denmark. It's very easy to fire people (and therefore easy to hire them), but the taxes are very high, so the government has enough money to provide social security for the ones who have lost their jobs.
Are you saying that companies finding legal ways around an tax system is a cultural thing and not a product of a system?
For example, the actors being companies with a predictable self interest playing within an incredibly complex tax system that is easily gamed if you can afford lawyers and accountants.
Weaken employee protections and social responsibility provisions and large numbers of the older, higher-paid workers will likely be replaced by lower-paid younger workers. Neither the still-employed non-youths nor the newly-employed youths nor the eighty percent of youths who had jobs will have any job security anymore.
That doesn't sound like a societal win at all.
The people pushing the youth unemployment figure don't actually care about youth unemployment. The point is to beat everyone over the head with that figure to get them to agree to stripping everyone's worker protections away.
Now relax the assumption. At employee 50, you have to start complying with a bunch of onerous and expensive regulations. This limits your ability to make profits and to continue growing your business—which, among other things, means being able to hire fewer workers and having to pay them less. The magnitude of the effect is less than that of the forced-charity sale, but the sign is the same.
These kinds of laws are based on a fallacy: they assume that the interests of companies and employees are not well-aligned. What is worse, such laws guarantee misalignment—thus exacerbating the very problem they're (ostensibly) meant to ameliorate. In medicine, this is called iatrogenesis. Did the bloodletting not work? That must mean we need more bloodletting!
These laws also create a decoy, which has effectively distracted you from the real enemy. The object of your ire should be boneheaded labor laws, not the "greedy" corporations trying to evade their restrictions. It's a diabolically clever political strategy, and it ensnares many a well-intentioned voter. But it's never too late to escape the trap.
Obviously, it's difficult to buy into the idea that employers' and employees' interests are aligned when business owners recoil in horror at the notion of having to meet once a week with the equivalent of shop stewards and bridle at having to explain why they need to lay off chunks of their workforce on short notice.
Great, then be a responsible entrepreneur and don't try to slither through every crack in every law designed to keep the society that your kids will grow up in healthy.
If you would like to see the terminal state of a laissez-faire society, you can visit Hong Kong. More luxury cars on the road than anywhere else you'll ever see and plenty of the toothless, recyclables-scavenging senior citizens that I referenced earlier as well. Hundreds of thousands of people living in literal wire mesh cages because that's all that they can afford. A wealth gap that yawns like a chasm.
It's easy to advocate policies when you think that you'll never have to actually submit yourself to living in the society that those policies will ultimately create.
1) pay a couple lawyers $300k to minimize taxes
2) pay the government $1 million
Both are legal. Choose one.
B: I employ no more than 49 people in each of my companies and start new companies as necessary to avoid sharing profits with my employees, having to deal with worker councils, and the like.
Playing corporate twister to evade the clear intent of laws sure seems like loophole exploitation to me.
In addition to working around the intent of laws that empower workers, organized groups of business owners are constantly trying to overturn those laws and, in the meantime, discourage enforcement.
How are we supposed to ascertain the difference between a loophole that we should pretend not to notice, versus an engineered incentive, where the regulators are intentionally giving us a nudge to behave in that way?
Use empathy.
(1.) Imagine that you are one of the people who are going to be affected by your decision. Better yet, imagine that your parent/spouse/child is the one going to be impacted.
(2.) Next, assume that the law was crafted with the best interests of society at heart or, if it's a flawed law, try to reason out the intent assuming that the author was someone with empathy.
(3.) Try to cause the greatest good or at least minimize the harm of the action that you're about to take.
It's sad that it's so easy for the proverbial one percenters to get everyone else, who should know better, on board with their agenda.
Rather than copy and paste, I refer you to: