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Easing lay-off protection?

8 May, 2010 (16:57) | economy, proposals | By: Aerar

(German version published on 26 March, 2010)

Within a study the OECD is demanding to ease the lay-off protection in germany (German) and in fact there are many good reasons to ease or even end the lay-off protection. Currently there is an unbalance in the relation between employers and employees. While the employee is allowed to give notice at any time without naming any reasons the employer does not have this easy option. In extreme situations this drives employers to misinterpreted self-defence and makes them looking for title=”Vertrauensverlust” href=””>fabricated lay-off reasons (German) to get rid of disagreeable employees.

Another argument for an eased lay-off protection would be that competition and productivity would get strenghtened, if employers had the free decision which and how many employeers they want to occupy in the current market situation. Both number and qualifications of needed employees are subject of continous changes. Often even well-established employees could constrain the work flow even if they do not legally misbehave. This may be if they lack needed qualification or the will to work. Above that it is hard to understand why an employer should be enjoined how to make his planning.

An eased lay-off protection would make recruitment of new employees more attractive and so employers would be motivated to employ new people, rather than weight the existent ones with overtime and other troubles. This way the existent work load could be distributed more equally among the workers. Protected jobs on the other hand disadvantage the new comers and the unemployed and could lead to long term unemployment and unemployment among young people in worst case. In the end there is just a certain amount of work and an employee who can’t be demissed blocks the job of a possible follower.

But there are drawbacks of an eased lay-off protection as well which in most cases are connected with social responsibility. Generally the social responsibility of the employer can’t be denied. This is already because of the huge previligees the employer has compared to his employees. Above that all companies directly or indirectly profit from the ressources of the community. Be it by polluting the environment, the usage of public property or by recieving subsidies. In boom times employers usually profit more than their employees and the entrepreneurial risks has to be reconsidered after the massive bail outs in the latest economic crisis.

One possible way of socializing profits would be the unconditional basic income, which indirectly would let everyone participate on the successes of the economy if it were connected to the development of the economy. But more problematically it were with the individual income of the single employees. One who would lose a well payed job even with a guarantueed unconditional basic income would experience deep cuts in his financial situation. This imponderability would influence his long term planning and would let him act more cautious in his role as a consumer. People who do not know whether they still have a job in a few months would not build a new house and would try to save some money instead of spending it all.

A general strengthening of the power of the employer is another problem. I don’t think it would be a problem if an employer would fire his emplyee just because he does not like him. After all the employee has the same right to do so. And the job of the employer is to distribute the duties among his employees in the way he considers is the best. And personal animosities might be relevant for this decisions as well.

The problem would be to avoid misuse of power. Employees with special duties such as working in the quality assurance or elected employee representatives still might be protected by special rules to enable them to fulfil their censorious jobs in the company. But what, if the simple warehouseman is asked to work “voluntary” extra time after the end of his shift, especially in connection with the polite hint that otherwise he might not stay warehouseman too long any more?


With the considerations made above I would welcome an easing of lay-off protection by pure intellectual reasons. I think the lay-off protection all in all is an inefficient measure which hinders the economical progress in a sum of many single cases.

But changing the current laws would lead to many practical questions which could lead to destroy a deficient balance which was practiced for decades now. The social question of distributing wins would make necessary a new system of distribution. And still it is likely that the consumers be insecured to a degree that they consume so much less goods that all positive effects of the ease of lay-off protection would get used up.

So as long as there is no solution for these problems I don’t think easing the lay-off protection is a practicable measure in Germany.