As a foreigner it’s so alien to me that such a provision isn’t mandated by law anyway, and that there isn’t broad support in the population to restrict employers from firing at will… wild.
An an American it's hard for me to imagine how companies could ever work with universal protections from firing at will. What if you're running a painting business, and there's a downturn in construction. Do you just have to pay people to do nothing, since they haven't done anything wrong and aren't allowed to be fired? Or what if a large company needs to make a strategic pivot and fire some employees to hire others with a different skillset.
It seems like economists do consider this to be one of the big reasons why the U.S. economy has grown so much faster than the EU. Hiring in Europe is much riskier, so companies would rather stay small.
For a start all implementations of such protections i'm aware of don't apply till you have over X employees which rules out your specific example. eg. Australia allows businesses with under 15 employees to fire at will. Small businesses have very little employee protection for exactly the reason you stated; You need to be able to hire/fire since each individual employee is such a large part of your workforce. It's generally understood that if you work for a small employer you are more at risk because of this. Large employers are seen as a safer job.
So these protections are always tradeoffs. You can actually earn more at the smaller companies and those places are typically good to get your foot in the door. The larger companies where these protections apply can afford to follow the process and having the process there gives stability that some people need in a career.
I actually think it comes down to the viewpoints on careers. There's no risk to any particular business since the laws are written to only target business that can reasonably follow the process. There is a different viewpoint on working at bigger stable companies vs smaller companies though. One's seen as a stable career and the others seen as temporary (of course exceptions apply).
In all those cases, it sounds like the company would actually suffer the consequences of their prior mismanagement (compared to today where mostly just employees suffer from bad management decisions).
Yes, that means some companies might go under when they could have saved themselves by mass layoffs. I'd be okay with that trade.
Yes, that means growth might slow down to more reasonable levels. I'd be okay with that trade. Europe isn't booming economically like the US, but if you've ever traveled there, their quality of life seems perfectly fine, and costs are much lower.
> but if you've ever traveled there, their quality of life seems perfectly fine
I'm not sure if traveling there is much of an indicator of anything. Doing business there over the course of many years might be a very basic table stakes start to get any idea of what is happening. Even then it will have large blind spots. Most folks traveling to Europe are also traveling to the richest parts of the richest countries and ignoring the rest.
Inertia is a hell of a drug. For how much longer can western Europe stagnate and continue to fall behind the entire world little by little? There are bright spots, but those seem to becoming fewer and further in between. Talk with the younger generations and you may start to get different answers than you expect.
The US system certainly isn't how I'd design things today, but I very much would avoid what the EU is seemingly running headlong into. How much of that has to do with worker protection laws is certainly highly debatable though.
In this scenario, you would go through redundancy processes instead of simply firing people.
Depending on the laws and the country, it involves consultations, handing out offers for alternative roles in the company, mandatory notice periods and timelines, and severance pay.
Or what many multinationals do, you offer non-legally-redundancy severance deals by paying the employees out.
Severance already happens in many industries in the US, however it’s generally only for those paid very well, which arguably need the legal protections less. So such laws are designed to level the play field and prevent abuse of the system. For instance, if you make an accountant redundant, you can’t go and hire another one for a period of time because that means the role was required the whole time. If you want to remove a specific person from a role, you fire them for cause (say bad culture fit or inadequate work) or offer them a payout to leave.
There are usually provisions for firing people due to financial hardship or having too few contracts. The employer must declare the reason, but if it’s found out that they lied, there is an avenue for the worker to get compensated.
That's not how it works at all. Of course you can fire someone with proper cause, you just can't fire someone __at will__. Lack of demand for the position is proper cause. If you don't need staff you can fire them, but you cannot fire someone and hire someone else in the same position.
What's the argument to not be able to fire someone because you can hire someone with better or relevant skills instead? That makes the business stronger, which means it can make more money, which means it can hire more people.
Well the arguments are many, and the counter-arguments also many. The point of my comment was not say that the (typically European) system is better, but it's not like described as parent commenter where you cannot fire people and are stuck with too much staff. That is not the case. I wasn't really arguing for it being better for the company and/or society.
Relevant skill could be proper cause. You can absolutely fire someone for not having the skills you need and hire someone else with the right skillset.
There’s a huge gap between at-will-employment and no ability to fire people at all.
FWIW, it looks like 11 US states have “Implied covenant-of-good-faith and fair dealing” which mean “an employee may only get fired for a reasonable, lawful, and sufficient reason.” The list is also interestingly bipartisan, Alabama, Utah, and Massachusetts are on there. And it must not hurt business too much, since Massachusetts has that very high GDPPP stat.
There are shades of grey. Large institutions should fall back on other means (reduced hours, pay cuts, comfortable severance, longer heads-up for firing) before resorting to overnight-mass-layoffs.
> why the U.S. economy has grown so much faster than the EU
Again, shades of grey.
The economy is a means to an end. If economic growth leads to worse life-outcomes for the populace, when what's the point of having a 'powerful economy'. Now, govt. policies shouldn't knee cap the economy. But, let's not tunnel vision on it as the sole indicator of development.
In my experience, Europeans with a $80k wage live better lives than American tech workers on $300k. To put in concrete light : most American tech workers get 14 days of vacation a year. All that work and all that money, and you only get to enjoy 2 weeks a year in the world's richest country ? That's pathetic.
Exactly! US workers have to fight tooth and nail for things that employees can just expect from other countries. That's why strikes like this are such a big deal.
