Advice for US entrepreneurs who move to Europe
english.martinvarsavsky.net
english.martinvarsavsky.net
> "Not only are forced severance pay packages a problem because most start ups fail and they still have to pay them but also because start ups are constantly trying out people and the concept of trying out people is very costly in Europe"
I've been an unpaid intern in UK. My first full-time job in Spain clearly stated that I was on trial for the first three months and after that they didn't have an obligation to hire me... Oh, if this guy wanted to try different people, he could hire them as freelancers.
> "In Spain, France, Italy, health care is free."
No, it's not. People are taxed...
> "You could argue that it is healthy to take sick days but unfortunately what happens here is that patients ask doctors medical justifications for paid job absences"
Probably there are a few cases like this. I don't see this guy complaining about how low salaries are in Spain.
> "In Europe there is a general belief that work is punishment and that the role of government is to protect people from overworking"
No there's not... People want to work and they want to have a life. I've worked in Spain, and the impression you get from the employers is that you have to thank them for giving you a job, in my job in US they thank me for being there and make sure I'm happy.
> "So there are many rules that make it hard to work the 12 hours per day that a start up may need in its initial months"
Yeah right. My manager in Spain used to tell us that we were in a project with a fixed deadline that had to be met, so if we had to work extra time including weekend we would...
> "To work hard, to work long hours, is actually illegal in Europe"
What does working hard have to do with working long hours?
In the UK it has recently been ruled illegal in many circumstances to pay interns less than the minimum wage (basically if they do real work), so if you feel like it you can ask your ex-interner for the money. http://www.guardian.co.uk/uk/2012/oct/19/interns-payouts-min...
Whether anybody would feel comfortable signing such a thing though, is a different matter.
If it was that easy, then all companies would do it.
> When starting a company in the US, informality rules, we all know the HP story that HP was started out of a garage. Now in Europe work is so regulated that you can’t start a company out of a garage because you can’t legally work in a garage.
> A friend of mine was fed up with an employee who worked poorly and told him that if he didn’t work harder he would fire him. This employee went to see a doctor, told the doctor that work depressed him and he was declared a mental patient, as a result my entrepreneur friend had to pay him for a year of doing nothing.
As a European (Netherlands), I recognize these points very strongly. This is not just Southern European stuff. It's absolutely ridiculous how easily angry/unmotivated employees can suck a firm or department dry though sick leave and whatnot.
That said, there's also
> In the end what many European employers do is not give out stock options and give tiny bonuses. In the end what these laws do is that employers go for low fixed compensations and don’t expect outstanding work.
This is so American that it hurts: want people to perform? Put a carrot in front of their noses. The European approach would be trying to make their work interesting and the work environment good, so that employees are intrinsically motivated to do outstanding. Sure, there's many companies that don't understand this, but then there's real many that do. It is simply not a strong part of European culture to be motivated by money, primarily.
I understand the point behind stock options, I just daresay that the reasoning is a bad cultural fit for most of Europe. I know too little about American culture to be sure here, but this line of reasoning gives me the impression that many Americans start a company or join a startup in order to get rich.
My impression is that this is an uncommon motivation in much of Europe. All (few) successful European enterpreneus that I know (including the founder of my current employer) started a firm for other reasons, typically independence, creating the ideal workplace, or the wish to create some dream product.
Stock options give you the opportunity to get rich, but they don't give you any actual say in what the company does until it goes public. In other words, while it may help motivate employees to make the company a financial success, I can't see how stock options help encourage employees to contribute to a nice workplace environment, having interesting work for yourself and your colleagues, and general workplace happiness.
Now, at the risk of mixing "European culture" and "my opinion" a bit, and I may sound like a softie here, but I just don't think that getting big fast is the only measure to company success.
I think that a small but stable company that's a great place to work at may in well be more considered successful than a company that goes to a massive IPO in two years of work stress, little sleep and broken love relationships.
I want to work for a company for whom I'm nearly willing to work for free. Like anyone else, I have bills and expenses and of course I want to be paid... but my goal is to produce and contribute value. Having my basic needs met is a foundation for that.
I dunno. Maybe I'd understand better if I got in on the ground floor of the next Google and cashed out when they hit it big?
And one at my current employer that comes out next year will pay out £20k if you maxed out your contributions 4 years ago
And a lot of mainland Europeans give out 1/12 bonuses at year end the "13th Month"
Working overtime is perfectly legal in Denmark for instance, if the employees prefer it (forcing them can be illegal). The reason is that in Denmark (and other Nordic countries), labour regulations are not enforced by law, but by negotiations between the employees (unions) and employers.
Denmark doesn't even have a minimum wage law, for instance!
Also here; it is not incredibly difficult to fire people. But as an employer, you need a good reason, or the courts will side with the employee and it'll cost you dearly. The advantage of this system is that it makes employers more keen on hiring people, because in the trial period (usually first 3 months), firing people is more easy than usual.
European countries are very different, and Americans seem to forget that. He does mention that they are, but it seems that even to him he doesn't realise the actual difference.
The basic difference is that in a Civil Law system 'the law is the law'; court rules cannot change law practice. In addition, you cannot use previous court decisions to argue in a court of law. You can use them as guidelines, but nothing more.
This means that it is quite easy for most people to understand how the law works; just look at the law text and the text's comments (which are also important when interpreting the law, i.e. understanding what the intent with the law is).
Because then the law (text) is usually more complicated, and the bureaucracy adds complexity to it.
But believe me "just the law book" is not as easy as it sounds.
The state of Louisiana was inspired by the Napoleonic Code: juries there decide both facts and law. Precedent is not worshipped like it is in the rest of the U.S.
And even then, he tends to be more wrong than right (overtime isn't illegal in France, as far as I know, although mandatory overtime is; and depending on the status of the employees overtime pay may or may not exist: broadly-speaking blue-collar workers are on the clock and paid overtime, white-collar workers are on "260 days" contrats an won't get paid extra if they work 20h/day of their own volition. They'll likely have to get paid (or get extra time off) if they have to work more than 5 days a week or during holidays)
> Also here; it is not incredibly difficult to fire people. But as an employer, you need a good reason
And there usually is a delay of some sort, although in tech it can often be waived through mutual agreement.
> the trial period (usually first 3 months)
Which, depending on the country, can be renewed once.
> firing people is more easy than usual.
Trial period is essentially equivalent to "right to work" US states: either side can terminate employment at will.
Bonus payments are no problem at all either. If you feel like paying a bonus, pay it. If you want to have a written formula, write it down in a contract - but then you need to pay it if the employee qualifies.
If your employee pretends to be sick, send him to the public health officer. If he isn't sick it's an immediate firing offense. Even verbally threatening to go on sick leave is an immediate firing offense.
Severance packages are not mandated. You can have them in a contract, but the default is no severance package. It's still somewhat harder to fire someone than in the USA since you need an actual reason to do so. "She's irresistible" won't do. [3] It's pretty common to have 3-6 month probation period in a contract where both parties can terminate the contract on short notice.
The part where he's right is extra work. The law is pretty strict here: 8 hours a day is the normal maximum, 10 hours a day for a limited time, maximum of 60 hours a week. There must be a 10 hour break between end of work and beginning on the next day. You can break those limits in emergencies, but you need a qualified reason. That sounds pretty harsh, but it's reasonable. It protects the employees on one side, but why would I want them to work more than 8 hours a day on a regular schedule when productivity drops sharp after 8, maximum 10 hours. We can do crunch time for a couple of weeks, but after that it just doesn't pay of. 12 hours a day are neither healthy for the employee nor for the startup. A team of zombies just doesn't perform. So I'm very little bothered by that law. Germany seems to be doing just fine productivity wise.
[1] The monitor should be placed parallel to the window to reduce reflections, the chair and the table must be adjustable in height, ... [2] http://www.gesetze-im-internet.de/bundesrecht/arbst_ttv_2004... [3] http://edition.cnn.com/2012/12/22/us/iowa-irresistible-worke...
I think part of these stems from the fact that some of the extreme outliers in europe (in terms of wealth or political power) often inherited their wealth. Whereas the USA has the attitude that "This is America, the land of oppertunity, where an illiterate immigrant can step off the boat in ellis island and if he works hard enough, he can own a skyscraper in Manhatten". Whereas, in Europe, there are many people who inherited their wealth. There is also a much more noticable class system.
Strong employee rights comes from blue collar people who, being aware of the class system, do not believe that they will ever be mega rich, and hence fought for more rights & laws for themselves.
(Not to say either 'meme' is correct, I'm just pointing out what people think, which informs what they think.)
In US where the capitalism is too strong, people tendo to believe that wealthy = happiness
Despite not been a european, but a brazilian, i think europeans understand that happiness its a more tricky and uneasy concept to conquer.. and is made of much more values.. even the simplest ones..
They are far more sophisticated in human relationships and the concept of happiness..
but lets not generalize..i know a lot of sophisticated americans.. but is much harder to get there.. cause it needs one to get free from its own dominating culture..
In Brazil we have similar regulations, and labor parties are stronger and popular..
We try to work and be happy with our work, and make a living, but also we want time to have fun, to be with the family.. even if you have to earn less money..
those are different perspectives from the life quality we all want and spect.. different equations, different answers..
who are right? i think it always depends.. what is good for you may not be good for me.. and this means it cannot be enforced by the stronger part of the relationship..
freedom is based on choice.. on the capacity and possibility of choosing.. if someone stronger, be it a enterpreteneur or a country, enforce someone to take a path, that is just limiting individual freedom.. and that is a real threat..
People are different, and have different life values.. we should protect that.. not enforce the "everyone should fit into this box, please!" behavior
I tend to like more the way europeans live life than our brothers from north.. because its everything about happiness not about (just) money, and i think they(europeans) are more conscious about it.
Life should be driven by passion, making a living, money, wealthy.. should be just a consequence of that.. or not :)
What does that have to do with work ethos? Do you think there is a strong correlation between working hard and the dream of becoming extremely wealthy? Of the four options, (born poor/rich, working hard/slacking) I agree that (born poor & slacking) is highly unlikely to make you wealthy, but that is about it.
The exaggerated version of my view on workers rights in Europe/the EU (1), compared to the US, is that, in Europe, the class struggle between the Proletariat and the Bourgeoisie (http://en.wikipedia.org/wiki/Proletariat#Usage_in_Marxist_th...) has led to a distribution of power that gives more power to the proletariat.
That is why, for example, consumer laws are stronger in the EU, and that workers have more rights, enforced by the EU, more or less acting for all workers.
In the USA, "workers" and "owners" are more each others enemies than collaborators for a common cause (for an extreme example, see http://www.motherjones.com/politics/2012/02/mac-mcclelland-f...), and workers work hard for two reasons: fear of their employers and the _dream_ of becoming extremely wealthy.
In the EU, on the other hand, bosses respect their employees and give them room for self-development. That makes them work hard (did I say this was the exaggerated version?).
I also thinks similar logic applies to medical insurance and the prison systems in the EU and the USA, but that may be a bit far sought.
Also, some loose remarks on things stated in the article:
- AFAIK, you can start your startup in a garage all you want. Rules about workplace conditions only apply to employees. As long as you don't have employees, you can work wherever and however you want.
- Similarly, you can work as long as you want for your own company.
- Many countries have limited liability companies (http://en.wikipedia.org/wiki/Limited_liability_company) that give you easy protection against losing your house in case your company goes bankrupt. The difficulty of starting one varies by country (Google showed me ads claiming a price of about €400–, or about €3000,– if you want one within four hours for Dutch ones)
- When I learned about it earlier this year, I was surprised that Germans have to have a doctor's approval to report sick. That sounds like bureaucratic waste to me. In the Netherlands, you just report sick.
(1) I know the two are different, but the EU 'exports' its rules outside the EU, too. For example, Switzerland is not in the EU, but it follows many EU directives because it wants to trade easily with its neighbors and even pays towards the EU budget (http://en.wikipedia.org/wiki/Switzerland–European_Union_rela...); Norway is not in the EU, but it is in the Schengen zone of 'no passport check on travel'. To get there, it has to comply with several EU rules (http://en.wikipedia.org/wiki/Norway–European_Union_relations)
On the other hand, there are so many degrees of 'in the EU' that mere mortals cannot keep track of them (http://en.wikipedia.org/wiki/European_Union#Member_states: 27 members, one almost member, 5 candidates, 4 potential candidates, one potential candidate which is not recognized as an independent country by all, some EFTA countries not in the EU, micro states that have the euro, but are not in the EU, overseas areas of European countries (http://en.wikipedia.org/wiki/Special_member_state_territorie...). Nevertheless, I'll treat "Europe" and "the EU" as synonyms. That should do for this rant.
> What does that have to do with work ethos? Do you think there is a strong correlation between working hard and the dream of becoming extremely wealthy? Of the four options, (born poor/rich, working hard/slacking) I agree that (born poor & slacking) is highly unlikely to make you wealthy, but that is about it.
I'm sorry I was unclear. I meant that as a list of items that tend to be different not that the work ethos is different in the issue of rich people as role models.
Two minor nitpick: Studies show that of the 4 options (born poor/rich, working hard/slacking) two are bad: Born poor is highly unlikely to make you wealthy. Slacking will make things worse, but in general the equation "born (modestly) rich -> die rich" and "born poor -> die poor" holds true. [1]
Calling in sick in Germany is a bit more difficult: By default you only need a doctors approval after the third day. The employer can demand a medical certificate on day one if they choose to. Small businesses get most of the wage paid by the health insurance for the period that they have the doctors certificate, so they tend to be stricter about it.
[1] see for example http://www.americanprogress.org/issues/economy/news/2006/04/... for the american case, sadly social mobility is not on an acceptable level in germany either. Nordic countries tend to be better in that respect.
Do you have any modern (i.e., post 1940) evidence for this? What little empirical evidence I've seen suggests 60 hours is optimal. (But what little evidence there is applies to industrial fields, and likely doesn't generalize to knowledge work.)
http://www.overcomingbias.com/2011/12/work-hour-skepticism.h...
http://www.overcomingbias.com/2011/12/construction-peak-60hr...
You linked to a claim for skepticism, but did not mention the the extensive counter-examples from the first commenter, at least as it applies to some subfields of work. The quote I find most persuasive is: "The best data on sustained intellectual activity comes from financially independent authors. While completing a novel famous authors tend to write only for 4 hr during the morning, leaving the rest of the day for rest and recuperation."
That is a strong suggestion that 4 hours of creative work is about the daily limit. Why is this not a sufficient counter-argument for a broad "60 hour is optimal" recommendation? After all, a self-supporting author has good economic inventive to create more works, but this puts a limit of 28 hours per week on creative work.
Your second link is based on the Nov. 2001 newsletter of "a national firm of Construction Consultants and Claims Specialists, assisting owners and contractors in achieving profitable and trouble-free construction projects", and not, say, a peer-reviewed journal or research organization. The newsletters most recent citation is from 1992, so a bit over 20 years old, instead of a bit over 60 that you are disdainful about.
Can you find anything more recent, and research-oriented, which provides better evidence for your "60 hours is optimal" suggestion? In your analysis, please note, as the newsletter points out, that "The fatigue resulting from a daily two-hour commute is considered similar to a daily increase of two working hours.", so you can't look at a 40 hour work-week in the City of London and assume that that's the only factor to consider, if the commute takes an hour each way. (The newsletter highlights this because in some construction jobs the crew is housed on-site, so there is no commute, which makes the direct interpretation of the chart results difficult.)
Because the overcomingbias.com references didn't include more recent, and more academic/research oriented papers, I suspect both it and you did insufficient research.
In any case, I don't think you understand the math of the evidence that you report. The contracting job numbers say that it's better to hire 1.25x people, who work 40 hours per week, than it is to hire 1x people who work 60 hours per week. Assuming the cost per hour are equal - which it often is for hourly construction work - then the first gives the company more productivity for the same cost.
The only way that 60 hours per week is optimal for the company is if the workers are paid constant rates no matter how much they work per day, or if it wasn't possible to hire 25% more workers (e.g., because of the size of the site, or number of hours available to work). But that's not good incentive to get people to work longer hours, is it.
So I don't understand how you drew your conclusion that 60 hours is optimal.
Here are some of the more recent (post-1940s) papers on this topic, quoting from the CDC, which is one of the top Google hits for this topic, at http://www.cdc.gov/niosh/topics/workschedules/abstracts/daws... :
> Few studies have directly investigated the financial consequences of long working hours. For example, in a study on white-collar jobs, performance decreased by as much as 20% when 60 or more weekly hours are worked (Nevison, 1992). Data from 18 manufacturing industries in the U.S. show that a 10% increase in overtime resulted, on average, in a 2.4% decrease in productivity measured by hourly output ( Shepard and Clifton, 2000). High overtime levels can cause poor employee morale, which can affect productivity and absenteeism. For example, Circadian showed that 31% of extended hours operations that have extremely high overtime hours (25% or greater) also had poor morale, compared to only 13% of companies with low or normal overtime (Kerin, 2003). Long working hours and overtime contribute to increased worker fatigue and safety problems. For example, the average cost of workers compensation claimed per individual at extended hours facilities that reported severe fatigue problems was considerably higher ($4,037) than at facilities that report moderate ($2,240), minor ($981) or no ($276) fatigue problems (Figure 4) (Kerin, 2004).
Note that productivity is only one of the factors. Health costs, impact on family life, and accident claims are others (though the last can be included in the productivity numbers, as they seem to be for the construction numbers).
The Shepard and Clifton paper uses post-1940s data, and would be a better reference than the newsletter. I'm not paying for access to the full paper. You?
Again, don't misinterpret the 2.4% decrease from 40- to 60-hours-per-week to say that working 60 hours is better for the company than 40. If the employees are paid per hour, than it's better to hire more people than it is to have the same people work overtime. (Again, ignoring secondary effects; perhaps the factory isn't large enough for 25% more people.) Plus, the employees will have better morale, and bad morale decreases productivity.
Another, more modern review (and definitely better than a company newsletter) is "Working Long Hours: A Review of the Evidence, Volume 1" (2003), from the Institute for Employment Studies in the UK ( http://webarchive.nationalarchives.gov.uk/+/http://www.dti.g... ). It references "Bienefeld (1972) who observed that major reductions in hours in British economic history preceded rather than followed peaks of productivity growth", though "this evidence may disputed." Still, I find nothing in there which gives strength to your "60 hours is optimal" suggestion. If anything, most of the research is aimed at determining if 35 is a more optimal number than 40.
Based on your termination of our previous exchange on the similarity of employment to a monopoly, I'm not surprised that your analysis seems weak. Your math seems wrong and your citations poor. (BTW, in that monopoly thread I've cited several economics papers which explore the model I outlined, and the developers of that model received the 2010 Nobel Prize in economics. I've also cited several papers which use the factors that you say you've never seen in economics models. This supports my belief that your analysis seems weak.)
I'll take a look at your CDC links and see if they answer my question.
Incidentally, my apologies for not responding to your reply to me - I didn't notice it on Christmas afternoon and I just logged on today. I'll take a glance at what you wrote.
A The statutory redundancy payment only applies if you have worked for two years (which most failed start-up wont have)
B If a company goes bust badly the state pays the redundancy - some multinationals have abused this by artificially making a subsidiary bankrupt the 100's redundant workers redundancy where paid by the Government when the parent company got of of Scot free.
And don't forget get that IT workers are considered professionals and so don't have the full protection of the working time directive.
Can't afford to treat your employees like humans? Want to give them big bonuses and then fire them the following year so they can't pay the mortgage on that house they put a deposit down on with that bonus? Don't want to shell out a bit of money on decent offices, and rather shove them in some little basement somewhere?
None of this is required for a startup. You can actually treat your employees as human regardless of the stage of your business - especially considering that this guy can easily afford this stuff.
Which is really the problem with targeting anything at "Europe" (be it a blog post or a business): there's always something new that differs enormously across countries.
Especially because for the past 20 years being an entrepreneur has mostly meant legally stealing big corporations. At least in the eyes of many. There are a lot of decent entrepreneurs, but they don't get any press.
However, the general mantra is "He has more than we do, he is obviously a scoundrel and a thief. You can't get there by being honest."
Get off it.
Entrepreneurs aren't worshiped like gods by default just for being entrepreneurs, that's all.
Also: http://www.garann.com/dev/2012/what-the-fuck-is-an-entrepren...
Every time that you get your espresso and you don't get a receipt (which is more often than not), the owner of the café pays no taxes.
Perhaps related is the fact ostentatious displays of wealth are generally frowned upon. In the US it seems fashionable for entrepreneurs to become fabulously wealthy, then flaunt their wealth as 'inspiration' to other would-be entrepreneurs. In Britain, if not the rest of Europe, this draws resentment more so than admiration.
Her Mum as an ex Air hostess was refered to as ‘doors to manual'
From France, the view seems to be that small businesses are mainly for artisanal things. People don't really have this idea of working your life away because our culture believes (rightly so? I imagine here the opinion might be opposite) more in that work is not the meaning of life, and so the idea of spending so many hours toiling away (especially in something like software eng, where there are 10000s of consultancies you could work for and probably be beter paid) seems counterintuitive. That or you're just greedy.
I'd also like to point out that Europe is not a country, talking about "Europeans" is silly outside of the context of "people who have access to affordable healthcare", and that mentalities change enormously across borders.
I completely agree. I was just referring to it as the article referred to it. I was talking specifically about the UK & Ireland.
Isn't this something the market will mostly take care of, especially in tech where people can easily change jobs?
"Jobs for life" is a net negative in Italy: it keeps young people out of jobs, and it makes people hold on for dear life to jobs they hate and aren't great at just because they are Permanent Jobs. Far better to have a lot of flexibility, and state support for the unemployed, rather than turning employers into supporters of people they do not wish to employ.
His views are far far from being mainstream...
Only if there is a perfectly functioning market. Which there often isn't in many cases. Hence the laws.
Markets often work well even if they're not "perfectly functioning". Governments certainly solve other kinds of problems decently even if they are not "perfectly functioning" either. I'm pretty happy with the health care here in Italy, for instance.
But this fellow has been entrepeneur-ing in Europe for more than 15 years, he has done quite well by his own admission, and now, after all this time, comes up with this hit piece against employee rights. It's deeply dishonest.
It's called World War I and II, and having learned a thing or two. "Conquering the world" in itself is a phrase only an utter brute would think, much less actually brag about.
Why can you not get to know the world, and cooperate with it? What are you scared of? Why not be a peer amongst peers, who but a coward would want to be owner? Keep the crap that makes your country crap in that country kthx.. there is no point in moving to the EU if you're not going to actually learn from it.
It is a highly subjective, very politicized and ideologically tainted description without any kind of understanding, and some of the attempts at interpretation of cultural and legal differences are either plain wrong or deliberately misrepresented.
It's an anti-European rant, nothing more. Here's a great gem for example:
"To work hard, to work long hours, is actually illegal in Europe."
Seriously.
I've worked long weeks before without any issue between myself and my employer (in the UK). Most people I converse with/encounter would probably say the same thing. All the EU working time directive (http://en.wikipedia.org/wiki/Working_Time_Directive) says is that an employer can't force you to work more than 48 hours a week. If you want to work 23.5 hour days, 7 days a week, and an employer who's willing to pay for that, knock yourself out.
Interesting enough some companies start to recognize that long hours don't get them as much value as they thought. I know of a case where a pretty large enterprise customer has a "max 8 hours a day" clause for subcontractors and freelancers.
The one in France has a strict work schedule. If he has to do some special works like traveling for a fair or similar, he will be rewarded with freetime and/or money. Working late? Rewarded.
The guy in Germany has a real problem. He is working late in the night on daily bases but he is payed only for the 40h stated in his contract. Everybody knows about it. Everybody is doing it. The workload demands it also. Nobody is talkig about it. Sure he could sue them but hey, they don't tell you to do it.
Also, employees can sue for unpaid overtime.
This makes companies extremely serious about employees leaving on time. In the company I work for, the computers automatically shut down at 6 p.m. (we're supposed to leave at five thirty).
That's the attitude that informs how & why that law was written.
PS: I'm still "infected" by this article: http://www.salon.com/2012/03/14/bring_back_the_40_hour_work_...
Laws, regulations, attitudes and tax rates vary widely. If you want to do a startup in Europe, choose a country first and then read up.
It is pretty insightful to see how a seasoned American Entrepreneur perceives Europe and the obstacles that can be found here. Not necessarily every obstacle applies everywhere. Some countries might even have different things hindering their competitiveness than those outlined by the article. But it definitely isn't all peachy for businesses over here (or there).
This article does provide a kind of road map on how Europe could improve its business environment. If it wants to is a completely different question.
It's a political anti-regulation rant. Nothing more.
Are you sure you're not confusing correlation and causation? China for example has no work regulations but engineers there don't get payed 3 times as much as in Europe. And China here is not an exception, US are.
You'd have to do much more research to claim that deregulation leads to better payed jobs.
Looking forward to hearing your keynote at Punta Tech :)
While it's true that many startups fail, I wouldn't go so far as to say severance pay is an attack. You can fire someone with two weeks notice in Spain, paying 33 days of severance for every year paid (used to be 45). AND take home salaries are usually lower.
What is done in practice, to compare worker compensations across countries, is to factor that into the salary equations, it means that workers are a lot more expensive than what the take home salaries might imply, but consider:
Employee A at an US startup has a take home salary of US$ 75.000 will cost US$ 100.000 or so to the employer per year.
Employee B at a Spanish startup has a take home salary of US$ 56.000 (43.000 euros), and it will cost US$ 100.000 or so to the employer per year :) , factoring in severance, healthcare, social security and other benefits.
As jordinl and others stated, most European countries have a three-month trial period for employees as well (edit: and it can be renewed, making the hypothetical 6-months-in non-performer as easy to fire as in the US).
So, an European employee is usually NOT more expensive than an U.S. employee, it requires different considerations (and setting aside money for severance & stuff). It probably is a lot more bureaucratic, but that's it (on the other hand, there are a lot less lawsuits). If the reason for moving into Europe was cheaper salaries, bad luck, but if the reason was an unexplored market, it should work out.
Edit: I do agree that there are some strong laws against beginning your startup in a garage, but the physical location shouldn't be a problem.
About starting a new company: you can buy a pre-made company for 150 euros in Madrid, and probably the rest of Europe, with most of the paperwork solved for you. There are plenty of programs for helping new startups get off the ground (depends on the country, some are more progressive like Finland)
http://www.doingbusiness.org/data/exploreeconomies/spain/#st...
You are talking about a "real" (Limited Liability) company, right?
However, what I'm talking about is a "real" company, only somebody else took the trouble to do most of the paperwork described in your link (it's the same as is done in my country, you buy a pre-registered company).
There are two kinds of Limited Liability companies in Spain:
http://www.spanish-living.com/starting-business-spain/faqs
"Should I form a new company or buy a ready-made company?
With a ready-made company ('off the shelf') you save the step of registering a new name (8-14 days). As soon as you come to sign at the notary, your company can begin operations."
"What are the differences between Sociedad Limitada (SL) and a Sociedad Anónima (SA)?
An SL is similar to the British 'Ltd' or the American 'LLC'.
Accounting for an SL is fairly simple and in the first three years, you can apply for 'simplified accounting'.
Accounting for an SA is more complicated and yearly auditing is required. An SL requires capital backing of 3006€, while an SA requires 60,000€. "
That's wrong. It only takes longer in most european countries. For example in Germany it takes 6 years.
Not all debts can be cleared by bankruptcy in the USA AFAIK. I don't think you can clear college tutition fees with bankrupcty.
To think of it from another perspective, harder bankruptcies mean that your debtors are not able to escape from their debts as easy. Surely that's a good thing for a business?
Those 20k are the equivalent of the health insurance + 401k. The only difference is that they are mandatory (and IMHO are a much better allocated).
Saw what constructive dismissal is - how is this making the employee life unbearable - he is getting full salary for doing nothing and nobody is harassing him. He is just not allowed to communicate with the rest of the company.
I'm sorry you felt you had to abuse people to achieve your business goals. This would not be acceptable in my country, but then neither would you be bound to keep a certain number of people employed.
This is perverse situation where employee rights has gone berserk - in my country firing is hard because the government prefers not to pay the unemployment benefits it is obliged to so they always side with the employees in the private sector.
source: I spoke to a German Tax accountant that specializes in startup consultation
While I'm in favor of deregulation, conditions like these generally prove to carry with them a lot of unintended consequences and perverse incentives.
It's only if you start acting the bollox that you need to worry about them.
Perhaps more folks would be more willing to work at startups if they knew they couldn't be fired at the drop of a hat with no or little severance. I also think it's good to have a penalty (or risk) for firing folks. People aren't just a commodity to be disposed of when not needed. Of course it would also be nice to have universal health care, and a culture that didn't glorify monetary gain above all else.
For example in Helsinki, probably every startup event / meetup is always in English, as well all the sites. Also I haven't come across that many legal hurdles working or hiring for startups. The contracts have been pretty similar what I have gotten in US startups.
But from the comments here it does seem to have agitated quite a few European employees...
bad translation, but after entering Italy you can stay longer by proving you have the resources to stay there (like a longer tourism visa) (that's on that site somewhere, not on this page, but that's a starting point)
The easiest thing to do is get married, or find a company here willing to hire you.
BTW, not sure you'd enjoy the beaches in Italy much at this time of year - it might be getting up to 20C in Sicily soon, they say, but here in the north it's about 6C and foggy.
BTW, I see you are a 'designer/developer': the company I'm contracting for right now might actually be interested in someone like that. If you're interested, or if you just want to chat about Italy, you're welcome to drop me an email.
On the other hand wages in Switzerland are also among the highest in the world - it balances out. So if you want to work here just start applying. Google has its largest development office outside of the US here and a lot of companies have their European headquarters here and a lot of (former) startups are moving here too (e.g. Evernote [2] or Kayak [3]).
I am not saying Switzerland is the easiest country to get into to work but it is definitely possible and a lot of people do. Over 20% of residents are foreigners and I am very proud of that fact. So: If you have unique skills, knowledge and creativity you are definitely very welcome here and I guess in most parts of the world.
[1] http://www.telegraph.co.uk/finance/personalfinance/expat-mon... [2] http://www.moneyhouse.ch/en/u/evernote_gmbh_CH-020.4.046.397... [3] http://www.kayak.de/contact