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Interesting first criteria for judging a country's economic opportunities: the ability to easily terminate your staff. The "Ease of Doing Business Index" actua

by davedx 13y ago

Interesting first criteria for judging a country's economic opportunities: the ability to easily terminate your staff. The "Ease of Doing Business Index" actually removed "how easy is it to fire people" from its indicators because of the controversy. Do you think everybody in the USA would agree that being able to fire people at will is a good thing for the US economy?

tptacek 13y ago
Yes. Employment at will is one of the major reasons --- perhaps the major reason --- why it is easier to start a company in the US than in, say, France. In a 3-person company, particularly in knowledge work where headcount costs dominate all other operating expenses, a bad 4th hire is a catastrophic problem: it means 1/4 of your staff is dysfunctional, maybe 1/5th of your operating expenses are being wasted, and as many as 1/2 your existing employees are (a) unhappy and (b) steadily becoming harder to retain. Now imagine not being able to terminate that employee. The Ease Of Doing Business index includes no metrics on employment law at all, not just termination; for instance, employee minimum wage, mandatory holidays, prohibition on contracted employees, prohibition of night work, and maximum work week are also not considered. That they aren't says more about the World Bank index than it does about the importance of these issues.
- mjn 13y ago
  For small tech companies in Denmark (I don't know much about other sectors/countries), it's common to hire people on a contract or fixed-term basis initially, something like 3-12 months. Then each side can decide if they'd like to make the arrangement more permanent in the future. For tiny companies with uncertain revenues it's pretty common to just have that be the default mode of employment: when you get 12 months of funding, you hire people for another 12 months, because you can't honestly promise any more than that anyway.
  - tptacek 13y ago
    Oh, cool, are you a small tech company person in Denmark? Can I ask: why aren't there more small tech companies in Denmark? It can't be for lack of quality education!
    - mjn 13y ago
      I'm not; I'm a useless academic. :) Many of the students in my program start small game companies, though (I teach in a game masters program), so I follow that scene a bit. A few examples that have come out of the program here: http://conquistadorthegame.com/ http://conquistadorthegame.com/ http://machineers.tumblr.com/ http://machineers.tumblr.com/ http://www.knapnokgames.com/ http://www.knapnokgames.com/ http://gutefabrik.com/ http://gutefabrik.com/ http://duckandcovergames.com/ http://duckandcovergames.com/ http://www.seriousgames.net/ http://www.seriousgames.net/ Most of the small tech companies I know are pretty low-key, though. Besides the game company route, another common one is a small team of 1-3 people making a living doing iPhone app development, that kind of thing. Some congregate around hackerspaces like: https://labitat.dk/ https://labitat.dk/ Not as much of the typical 'startup' route per se, although there have been a few (Unity3d and Bitbucket come to mind). There's also Copenhagen Suborbitals, which isn't for-profit, but is probably the most widely recognized organization to come out of the Copenhagen hacker/maker scene.
      - busterarm 13y ago
        Shameless plug for where my friends work, but there are consulting companies like http://bestbrains.dk/ http://bestbrains.dk/ Definitely a small tech company but larger than what was mentioned.
- danmaz74 13y ago
  To add a data point, Italy has some of the strongest job protection laws (at least theoretically), and still your example wouldn't be a problem at all. First of all, even for a permanent contract, there is always a 6 months "probation period", when you can freely fire your new recruit. Second, for a company under 10 employees, protection are much less strong. Third, most people nowadays are first hired with temporary contracts, which can usually be terminated with 1 month notice, without any reasons (there are exceptions for pregnant women). Those laws become a problem only when you start growing bigger. The real problems when you start are red tape, high labor taxes, and VERY high pension contributions - to pay the VERY generous pensions that generations up to baby boomers afforded themselves.
tsotha 13y ago
>Do you think everybody in the USA would agree that being able to fire people at will is a good thing for the US economy? Whether or not they would agree, being able to fire people at will is critical for job creation. In countries where you can't fire people expanding your operation is a much bigger risk. So you avoid hiring people - automation, outsourcing, whatever it takes. To remove this metric from any "Ease of Doing Business Index" is crazy, quite frankly.
- coldtea 13y ago
  >Whether or not they would agree, being able to fire people at will is critical for job creation. In countries where you can't fire people expanding your operation is a much bigger risk. And who said it should be risk free? Better it being more risky for the employer than the employees.
  - tsotha 13y ago
    >Better it being more risky for the employer than the employees. More risk for me as an employer means I don't hire anyone until I've exhausted every other possibility. When every employer does that there's high unemployment, so if you do lose your job you can't replace it. How is this a benefit to employees?
    - coldtea 13y ago
      >More risk for me as an employer means I don't hire anyone until I've exhausted every other possibility. Doesn't matter, there would be someone else who does hire. Or you thing jobs would dissapear if people dont have a cushy road to business success?
      - tsotha 13y ago
        >Doesn't matter, there would be someone else who does hire. But not as many as there would have been otherwise. It doesn't take a big change in labor surplus to lower wages for everyone. >Or you thing jobs would dissapear if people dont have a cushy road to business success? Yes, jobs disappear as it gets harder to fire people. That's what I've been trying to explain to you. That's why you don't want to make it hard to fire people - it's bad for everyone, but it's especially bad for employees.

by davedx 13y ago

tptacek 13y ago

Yes. Employment at will is one of the major reasons --- perhaps the major reason --- why it is easier to start a company in the US than in, say, France. In a 3-person company, particularly in knowledge work where headcount costs dominate all other operating expenses, a bad 4th hire is a catastrophic problem: it means 1/4 of your staff is dysfunctional, maybe 1/5th of your operating expenses are being wasted, and as many as 1/2 your existing employees are (a) unhappy and (b) steadily becoming harder to retain. Now imagine not being able to terminate that employee. The Ease Of Doing Business index includes no metrics on employment law at all, not just termination; for instance, employee minimum wage, mandatory holidays, prohibition on contracted employees, prohibition of night work, and maximum work week are also not considered. That they aren't says more about the World Bank index than it does about the importance of these issues.

mjn 13y ago
For small tech companies in Denmark (I don't know much about other sectors/countries), it's common to hire people on a contract or fixed-term basis initially, something like 3-12 months. Then each side can decide if they'd like to make the arrangement more permanent in the future. For tiny companies with uncertain revenues it's pretty common to just have that be the default mode of employment: when you get 12 months of funding, you hire people for another 12 months, because you can't honestly promise any more than that anyway.
- tptacek 13y ago
  Oh, cool, are you a small tech company person in Denmark? Can I ask: why aren't there more small tech companies in Denmark? It can't be for lack of quality education!
  - mjn 13y ago
    I'm not; I'm a useless academic. :) Many of the students in my program start small game companies, though (I teach in a game masters program), so I follow that scene a bit. A few examples that have come out of the program here: http://conquistadorthegame.com/ http://conquistadorthegame.com/ http://machineers.tumblr.com/ http://machineers.tumblr.com/ http://www.knapnokgames.com/ http://www.knapnokgames.com/ http://gutefabrik.com/ http://gutefabrik.com/ http://duckandcovergames.com/ http://duckandcovergames.com/ http://www.seriousgames.net/ http://www.seriousgames.net/ Most of the small tech companies I know are pretty low-key, though. Besides the game company route, another common one is a small team of 1-3 people making a living doing iPhone app development, that kind of thing. Some congregate around hackerspaces like: https://labitat.dk/ https://labitat.dk/ Not as much of the typical 'startup' route per se, although there have been a few (Unity3d and Bitbucket come to mind). There's also Copenhagen Suborbitals, which isn't for-profit, but is probably the most widely recognized organization to come out of the Copenhagen hacker/maker scene.
    - busterarm 13y ago
      Shameless plug for where my friends work, but there are consulting companies like http://bestbrains.dk/ http://bestbrains.dk/ Definitely a small tech company but larger than what was mentioned.
danmaz74 13y ago
To add a data point, Italy has some of the strongest job protection laws (at least theoretically), and still your example wouldn't be a problem at all. First of all, even for a permanent contract, there is always a 6 months "probation period", when you can freely fire your new recruit. Second, for a company under 10 employees, protection are much less strong. Third, most people nowadays are first hired with temporary contracts, which can usually be terminated with 1 month notice, without any reasons (there are exceptions for pregnant women). Those laws become a problem only when you start growing bigger. The real problems when you start are red tape, high labor taxes, and VERY high pension contributions - to pay the VERY generous pensions that generations up to baby boomers afforded themselves.

tsotha 13y ago

>Do you think everybody in the USA would agree that being able to fire people at will is a good thing for the US economy? Whether or not they would agree, being able to fire people at will is critical for job creation. In countries where you can't fire people expanding your operation is a much bigger risk. So you avoid hiring people - automation, outsourcing, whatever it takes. To remove this metric from any "Ease of Doing Business Index" is crazy, quite frankly.

coldtea 13y ago
>Whether or not they would agree, being able to fire people at will is critical for job creation. In countries where you can't fire people expanding your operation is a much bigger risk. And who said it should be risk free? Better it being more risky for the employer than the employees.
- tsotha 13y ago
  >Better it being more risky for the employer than the employees. More risk for me as an employer means I don't hire anyone until I've exhausted every other possibility. When every employer does that there's high unemployment, so if you do lose your job you can't replace it. How is this a benefit to employees?
  - coldtea 13y ago
    >More risk for me as an employer means I don't hire anyone until I've exhausted every other possibility. Doesn't matter, there would be someone else who does hire. Or you thing jobs would dissapear if people dont have a cushy road to business success?
    - tsotha 13y ago
      >Doesn't matter, there would be someone else who does hire. But not as many as there would have been otherwise. It doesn't take a big change in labor surplus to lower wages for everyone. >Or you thing jobs would dissapear if people dont have a cushy road to business success? Yes, jobs disappear as it gets harder to fire people. That's what I've been trying to explain to you. That's why you don't want to make it hard to fire people - it's bad for everyone, but it's especially bad for employees.