Lounsbury: A further near final note: on labor rigidities.

July 23, 2004

A further near final note: on labor rigidities.

Just reading "La VieEco" wherein there is an article complaining about the lack of employment growth despite a relatively good macro-economic performance (see http://www.lavieeco.com/Economie/Lacroissancesemaintientsansquilyaitcreationdemplois ).

I was moderately annoyed to see the fixation with the rural sector and its archaic organization. Perfectly correct, of course, but in some ways not at all. Among the more severe issues here is the extreme rigidity of the labor laws - as well as the moves towards the 35 hour week which are simply madness. Copied and pasted from the French code, things are poorly adapted to local conditions (rather typical actually for the region, and one reason I am so contemptious of those addled brained fools ranting on about 'fair trade' for they would impose this sort of nonsense on the developing world).

These labor laws are a real serious break. Even in my position, we're hesistating in re adding staff (although it is badly needed) insofar as there is an issue that once hired it's bloody impossible to fire without paying massive fees and the like (relative to total employment cost). Now of course currently employed labor loves this for it looks like a good deal for them. In fact, of course, it is not. It pushes much of the economy into the black or grey informal sectors, meaning little to no protection, but also meaning that the corporates themselves exist in a grey zone that tends to inhibit access to finance and the like (multiple books, etc. of course tax and other law are more influential here). It also pushes down growth, insofar as it is difficult for a start up to deal with these rigidities, and tends to raise the investment bar rather higher than the local economy can genuinely support.

However, the labor code is sacred since it "protects" the workers, and the upcoming anti-globo (Alternate Globalization movement as they were called in the press) are going to whinge on and on like morons about "imperialist" interests (such as myself I imagine) pushing for liberalization and "hurting" local workers.

July 23, 2004

A further near final note: on labor rigidities.

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