Workers’ rights and social protection: good ways to weather recessions
You’ve just got to read Flexibility gives way to rigidity’s virtues by Paul de Grauwe in Monday’s Financial Times. The professor of economics at the University of Leuven spells out why countries with tougher workers’ rights will fare better in the recession than those without, especially if combined with generous safety nets for the unemployed (and minimum wages too). Flexibility may allow more low wage, low skill jobs to be created in booms, but those jobs are easily disposed of in a recession, as so many workers in the UK and the USA have found. As unions have been arguing for years, making it easier to hire and fire generally simply makes it easier to fire workers in Britain when the going gets tough.