By Mario Rizzo
There comes a point where the continual mandating of benefits and restrictions on hiring has big consequences. We can see the handwriting on the wall in Europe as well as in the US. In Europe the young are more and more being left out of the traditional forms of hiring .
A recent article in the Financial Times (August 5, 2015) has a very interesting analysis of the issue. “In a continent known for strong employee protections, more than half of the eurozone’s young workers are in temporary jobs, churning from one short-lived contract to the next.” And this is in countries with high unemployment rates among the young.
Temporary jobs among the 15 to 24 year-olds (of those who are employed)
“…[I]n Italy, France, and Spain…fewer than 30 per cent of temporary employees have moved on to permanent jobs three years later.”
These temporary workers are not good candidates for on-the-job training and other employer investments in human capital. In the United States we see an increase in “gig hiring” in those areas of entry restrictions (taxis) and in areas of technological expertise. Some of this in both the US and Europe is, no doubt, desirable to workers from the point of view of freedom to decide one’s hours and so forth.
However, it is one thing to make a decision in an undistorted labor market and another thing to make a decision for this type of employment because mandates have significantly increased the costs of traditional employment. Furthermore, among the groups who have done the most to create this state of affairs – labor unions and so-called progressives – the reaction is quite interesting. They bemoan the decline of the middle class and the security of the good ole days. And they worry about more and more workers avoiding the “protections” and “benefits” of union and state.
The simplistic line that much of the public has accepted is that we can pile mandate upon mandate, condition upon condition without much effect on labor markets. We can mandate the good things people want. On the other hand, I am not so sure that labor unions really buy this line. After all, their interests lie with incumbent workers, not those who are struggling to get ahead. But ignorance abounds in all quarters.