alt Hacker NewsLabor cost has many aspects. One big and key difference between the EU and the US is that due to socialist policies in the EU, it is much much harder to fire people when the business takes a downturn. And this is why companies are not that eager to hire as fast as needed because it is very hard for them to downsize.
In the US, this provides the companies with the levers they need to maintain a functioning business in pretty much an instant. In the EU you can't do that.
Replies
carlosjobim • today at 12:52 PM
In practice you can hire people for at least 6 months in Europe on a "fire-at-will" contract. But yes, you're probably right. Down-sizing is not a problem in Europe, but you can't easily choose which people you want to let go, which is a problem.
I don’t know about other countries but e.g. in germany the law all but forces you to fire higher performing people before lower performing folks, with additional protections for especially unproductive employees. And that’s for when your business is sufficiently struggling to justify layoffs under the law.
The US hire-and-fire approach is then the other extreme.
The optimal amount of worker protection is somewhere in-between.