The European Lesson
I just returned from a four weeks visit to Europe. During my stay I would watch every night one or two evening news on Italian television to keep up with world events and better understand Italian and European concerns regarding job creation and the economy.
Needless to say, the European economy varies from member-state to member-state. German and most Northern European economies seem to be faring better than their Southern and Eastern counterparts. The pain is most evident in Greece, Ireland, Spain, and Italy. Why? The global recession impacted them the most. Why? Because their government deficit was way above the stipulated ceiling of 3% of GNP, and their total debt exceeded their GNP. It was also evident from the various reports that the excesses of the past 40 years had come home to roost.
During the expansionary and boom years of the last 4 decades, politicians were spending far more than their annual revenues. On the social front, politicians eager to gain the approval of their constituencies endorsed laws and practices advocated by labor unions and other interest groups. In addition, the spending binge fueled corruption and in some cases outright thievery.
I learned in my studies of business policy that the test of whether a policy is good or bad is dependent on a simple question. Can the organization afford the policy under good as well as bad economic times? If the answer is no, then the policy is not sustainable over time. Politicians failed to ask this basic question before getting on the bandwagon of spending.
As governments have been applying the ax to many policies to bring spending under control, it is evident that the burden has fallen most heavily on the lower economic classes. Increase in taxes, postponement of retirement, unemployment, and inflation have led to confrontations of all kinds, some violent, and a steady deterioration of the social fabric. It was painful to watch nightly elderly folks, the handicapped, the youth, and the unemployed display their anger and plight.
As political parties jockey for advantage, a bit of reflection is in order. Asking the arsonist to put out the fire seems to me to be foolhardy. But that is what it seems to be happening, including here at home.
It is evident to me that labor laws need modernization in Southern Europe and that the narrative about finding permanent positions needs to travel in a different direction ... the direction of finding meaningful and higher paying work.
Work versus Jobs
In Italy, there seems to be a fixation with job security.
People want permanent jobs. Period. Anything less than that is seen as uncivilized. Unions want government guarantees that no one will be laid off for economic reasons or fired without "just" cause. Their rationale is simple. Temporary workers cannot get a mortgage without it. And as a result, they cannot start a family or lead a "normal" life. This kind of thinking, of course, fuels the notion that the best place for job security is to work for the government. Never mind that government rolls are bloated and need to be cut down.
I found it curious that an administrative judge would be asked to rule on "just cause", most often ignoring the need to reduce costs or to eliminate inefficient practices. The unions are most vehement on this issue. The ranks of the administrative judge cadre is dominated by union-friendly judges. Once the progressives, unions are now hanging on to obsolete and often uncompetitive policies. Once innovators, now unions are conservators of the status quo.
These antiquated labor policies are stifling growth and investment. Global and domestic companies shy away from countries with high labor costs and from countries with labor laws that make it impossible to fire workers in case of economic downturns and restructuring needs.
Italians are proud to point out that, unlike Americans, they work to live. To them, the purpose of a job seems to be to meet one's economic needs. Never mind the fact that work is as natural as play and that we can gain tremendous satisfaction and self worth from our work. Of course, this is a great generalization. Not all Italians see it that way. Although of Italian descent, I find the view that work's sole purpose is economic as antiquated and obsolete. It ignores the psychological and social rewards we gain from work. At the same time, I too yearn for la dolce vita.
From childhood, we have been encouraged to work. We are gives chores to do. We have homework to do. We have to study. We have to do our part. Sure, some types of work are more satisfying or less physically draining than others, but, in my view, all work is noble.
The American Conundrum
The American story is very different. Americans, by and large, live to work. It has been ingrained in us since the beginning. Maybe to a fault. Our problem is not enough jobs.
We are not as obsessed by the permanent versus temporary nature of jobs. We understand that businesses might have to lay off workers when sales decline or when unprofitable. The problem here seems to me availability -- not enough good paying jobs to go around. Why? Because some work has shifted elsewhere, some overseas, in search of lower costs.
Germany has solved this issue by concentrating its efforts on niches where their competitive advantage is not derived principally from cost but rather from quality, service and reliability.
Because we are in a political season, politicians are looking for wedge issues to attract voters. I find this approach as divisive and not conducive to problem solving. The dialog should be postponed for the legislative season when principled policies can be discussed and enacted.
The most common topics are:
1. Equality
While everyone is entitled to equal access, is everyone entitled to equal rewards? There are those who believe that rewards should be dispensed based on results, while others believe that fairness requires that we share the rewards equally. Some might argue that not everyone's inputs into the pot are equal to begin with: some have higher or more skills, others might work harder, etc. The equal pay for equal work issue, though, has a lot of merit on its own. We do under-pay women and we have for centuries. It is time to get into the 21st century on this issue.
2. Proportionality
Some advocate that fairness is determined by the proportionality of one's contribution. Others disagree saying that everyone is entitled to be cared for, that every one should get a living wage, regardless of his/her contribution. Is this another way to spin the equality argument? Possibly.
3. Procedural fairness
Honest, open and impartial rules should be used to determine who gets what. There is lot of agreement on this point, regardless of political persuasion. The system is rigged with far too many loop holes. People will point to affirmative action as an example of a partial rule. Others will point out that the wealthy have far greater access to college education because they can simply afford it. And, we all know that the old buddy network is alive and well.
Summary
At this point you may wonder what the above three points have to do with work. My view is that many people are left out of the workforce because they lack access, because their contribution is unfairly determined, and because dependency on government hand-outs makes it easy for some to forego work because the handout received is greater than the paycheck one might receive.
What is your view?
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