Jobless in Europe – Such a good idea

NY Times has an article today on which is the best country in EU if you happen to be jobless. Without too many surprises, it is France.

“France not only offers generous compensation, but it has yet to organize an efficient network of job training and placement centers. So in practical terms, the most an out-of-work person has to do to maintain benefits, is to call in every six months to confirm that no new job has been found.”

When I was living in France about 5 years back, the Government took a brave decision and reduced the work week to 36 hours. In fact, there was some discussion about lowering it further to 32 hours per week; that means roughly 6 hours per day.

Germany was no better till Hartz IV came into effect early this year. Before that, an unemployed person is eligible to receive 60% of annual salary for the next 3 years without any compulsion to find a job.

“Germany has historically catered to both those in and out of work. Thanks to its still-powerful labor movement, job protection laws here are among the strictest in Europe. As for taking care of the unemployed, the generosity was epitomized by the notorious 2003 case of “Florida Rolf,” a former banker found living in Miami in an apartment near the beach that he paid for with $2,200 a month in German welfare checks.

In Germany, people who lose their jobs receive 60 percent of their salaries for 12 months to 36 months. Following that, they previously were able to draw long-term assistance and other benefits that could total 53 percent of their wages.

But Chancellor Gerhard Schröder cut back the long-term payments, and as of next February, Germans who are out of work for more than a year will be entitled to benefits similar to ordinary welfare – about $414 a month, plus money for rent and utilities.”

Now, many governments in EU are trying to reduce this unhealthy dependency through a “3 strikes rule”. Basically, if the aid receiver rejects more than 3 job offers, he will no longer be eligible for unemplyment benefits. But, this rule does not count on the lethal cocktail of structural problems and human ingenuity. Since the labor laws are so rigid, big companies hate to recruit in a big way; on top of this, the general economic malaise affecting EU means that most of job creation happens in micro and small businesses rather than big companies. Work in a small company is much more demanding and stressful than a job in big company in EU. So many people prefer to be employed a big company in a nice, secure 8–to-4 job or remain on unemployment roles than work their butts off in a small company. However, they do not have much choice in attending job interviews; if the local unemployment agency informs them to attend an interview, they have no choice but to. So how do they avoid getting a job? When my company wanted to recruit field sales people, we had some people who were referred by the local unemployment agency. During the interview, almost every single person told us they are not interested in the job and that they will not perform if we hire them! Instead of working hard to do good in a job interview, they try hard to do bad in the interview. All they want is that we put a sign on their interview book and send them on their way so they can wallow happily in unemployment.

This attitude is so rampant that every company, big or small is vulnerable to a critical level. We have an field sales person who stays at home more than 4 days in a 7–day week since he wants to spend more time with his family.

The problem facing Europe (or more specifically, EU) is not just the legal, welfare focused system; it is the people themselves. Unless, a significant, grassroots change begins in all dimensions, I am afraid that EU will become an irrelavant institution when it comes to innovation, business growth and sustainable job creation.

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