Labor Laws in Europe vs. U.S

By Neese, Terry | THE JOURNAL RECORD, July 22, 2002 | Go to article overview

Labor Laws in Europe vs. U.S


Neese, Terry, THE JOURNAL RECORD


Foreign business leaders have touted the formation of the European Union as a shining example of sound economic and business sense that would reflect and possibly improve upon the American business standard.

That may be the case on paper, but a closer look at the employment practices of several major European countries show serious employment issues that will slow any economic momentum initiated by the EU.

A recent article from the National Center for Policy Analysis highlighted the employment situation in Italy. According to the Organization for Economic Cooperation and Development, Italy has the toughest restrictions on firing workers. The country's labor laws allow that after a minor probationary period of employment, a worker fired from a company with 15 or more employees can bring a lawsuit challenging the firing.

That's not the worst part: If the lawsuit is successful, which is often the case, the company is required to rehire the worker as well as pay back wages and social insurance fees in addition to a substantial government fine. As a result of these unorthodox laws, the Italian employment force has developed an interesting profile, according to the National Center for Policy Analysis. For instance, after workers have completed their three-month probationary period, their absenteeism rate more than doubles and with little fear of dismissal, some employees provide less than peak effort when they do show up for work.

Given the circumstances, Italian companies are avoiding hiring. The Organization for Economic Cooperation and Development study found that the average American company that survives its first two years in business increases its employment 160 percent while the comparable Italian company will grow only 20 percent. While other factors have an effect on the Italian economy, the statistics leave little room to doubt that the labor laws play a large role in the nation's lower job growth. …

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