Why do Governments try to make competitive businesses follow the same kind of labour law that applies in their own offices?
I was reading on Linked In today a post by someone blaming Labour Law, and the risks associated with having employees, as one reason why Europe is having more difficulties getting out of the Crisis than maybe some other places.
I think his comments were quite true. There are now, in situations where employers even have any choice, serious reasons not to employ anyone whatsoever and just go for self-employed subcontractors. Reasons include:
1. What you said, the inability to sack anyone, and the huge potential claims if you bungle the sacking of an employee
2. Employees cost more because the social insurance regime in most EU countries is expensive on employment and the onus falls on the employer
3. Self-employed people are likely to be more entrpreneurial anyhow. They already showed themselves to be less supine than the chronic employee by dint of actually going on the self-employed subcontractor route.
The problem is, where does this leave people who cannot deal with the challenge of saying, “to hell with my social shield in employment law, I will put my self out as self employed and stand and fall on my daily performance, and not on the basis that I have accrued rights that make me unassailable even if I become useless”? Even those who genuinely intend to be conscientious and profitable parts of a boss’s team often can’t get their heads around the transition to self -employment, and simply remain unemployed. And where does this leave bosses in businesses in places or sectors where the tax office doesn’t smile on people being self-employed and calls it “crypto employment”?
The reform of labour law to be a little bit more business-friendly is long overdue in most of Europe. And it’s not just the EU. I did some work in the Ukraine a few years back and what I heard about the claims wrongly sacked people can bring about there I found simply astounding. I learned that if the employee who sacks a person – even in a disciplinary way which is fully justified, and fails to pay them all they owe by accident – if it is found even 5 or so years later that they did not pay them everything, even if they were under by a miniscule amount, they now owe that ex-employee their whole final monthly salary for each month of the intervening period as if they had been working!
Have people in Government who write these laws got some kind of grudge against business or what? Certainly they are welcome to have such luxurious laws to protect Government workers if they want to, but why do they insist on forcing them on private businesses? They don’t seem to understand, these Governments, that even though the government of the Czech Republic is not in competition with the government of China for the role of running this Central European country, the same is not true of Novak s.r.o., competing against China or anywhere else in the world with lower social leveraging, in order to make money which, if it is succesful, pays for the taxes that pay for the salaries of these Czech Government people. They certainly don’t create any wealth themselves – excpet for those politicians who have real business interests also, that is. And often the less there is said about that, the soonest mended.
- Does Germany really have a less regulated labour market than Britain? | Alan Manning (guardian.co.uk)
- Trade unions reject PM’s appeal to call off strike (thehindu.com)
- Davidov on Labour Law’s Goals (lawprofessors.typepad.com)
- Child Labour in North America (businessethicsblog.com)
Well worth a visit.
This is obviously old news, although it’s in today’s headlines, but history does have a way of repeating itself.
I was particularly intrigued to see how the Jewish prisoners at Sachsenhausen tried to tip off people about which notes were forged by making a tiny pinhole in the Britannia figures. Presumably they could have been severely punished had this been found out. They were willing to risk a lot in order to sabotage the Nazi war effort and help Britain in what little way they could.
This morning’s Rzeczpospolita newspaper led with the figures showing Polish exports up 15% on the prior year. This is a zloty measurement, which is aided by the low value of the zloty to the EUR in the second half of last year. As this situation is now reversed then that element of it may well reverse also if the current rate of exchange continues but this does not by any means account for the whole. The map shows that certain countries receiving higher exports are not Eurozone, and some such as the Czech Republic, even had currencies which decreased in value against PLN so an underlying volume increase is also highly probable and on this exporters can hope to build in the current year also.
Machine translation of that article:
According to new EU rules on which work is currently underway, the world’s four largest audit firms will be divided, and their names will change. The aim is to eliminate the risk of conflict of interest and shortcomings, which highlighted the recent financial crisis.
Investor confidence has been severely undermined the audit by the crisis, and I think the industry needs a change – said on Wednesday the Internal Market Commissioner Michel Barnier.
Policymakers can not understand why the auditors accept without reservation the condition of many banks, and shortly later, shortly after the outbreak of financial crisis, they need help from the taxpayers.
Barnier believes that the recent and obvious errors in the case of auditors, banks and Lehman Brothers AngloIrish and companies BAE Systems and Olympus’ show that audits do not take place in a proper manner. “
In his opinion, more oversight is needed and “more diversity in a very concentrated market, especially among the largest companies.”
Book of the largest companies in the world are generally checked by one of four companies: Ernst & Young, Deloitte, KPMG and PwC. In the eyes of the commissioner that situation is “in its essence oligopoly.”
According to the plan developed by Barnier large audit firms, in practice, the four largest, will have to separate from the rest of the audit activity, including tax consulting and other advisory services. This will help “avoid any risk of conflict of interest”.
Claire Bury, one of the closest współpracowniczek Barnier, said that if plans are approved by the Member States and the European Parliament, it will have an impact on the current business model of the Big Four.
In large audit firms, meaning companies with network revenues revenues in excess of the EU € 1.5 billion, operations in the area of auditing and beyond would be moved to a separate legal entity.
“They will have to change names and I suppose it is the issue of branding that will be the biggest bone of contention” Bury said during a press briefing.
The project also envisages the imposition of all listed companies the obligation to the organization of public tenders for audit services, and perhaps also the introduction of a two-stage audit.
European Commission officials are aware that new legislation would reform the entire market at a structural level and their implementation would require time. They expressed hope that the incarnation of the new rules into force would take about 3-5 years.
“This is not something that can be in a hurry” a spokeswoman said to Barnier.
The last word on the fate of the project will include Barnier to the Member States and the European Parliament. In this process, certainly there are many doubts, elbowing and all kinds of changes.
Under pressure from the other Commissioners Barnier, resigned at the last minute of a key element in their plans – the introduction in the case of listed companies ‘joint audits’, which would improve their quality and to help smaller auditors gain experience in controlling the books of large companies.
Instead, however, the Commissioner would like to encourage companies to conduct “joint audits” by the need to change or rotation of auditors.
The auditor would have the right to audit the same company for up to 8 years in a row, but in the case of joint audits wydłużałby period to 12 years.
Audit firm could not provide audited company unrelated to audit services, including consulting in other areas, including taxes.
The EU plan also prohibits the practice in which banks make loans to companies, provided that they were audited by one of the Big Four firms.
Representatives of the big audit firms have warned that audits may increase costs and decrease their quality. But much more favorably on a plan of their smaller rivals look, which would gain completely new opportunities for development.
Auditing industry is interested in the longer British Competition Authority, and the possibility of rotating the audit oversight is being mooted also in the United States.
- Audit firms face being broken up (bbc.co.uk)
- Big four auditors face break-up to restore trust..now we are getting somewhere (seeker401.wordpress.com)
- Michel Barnier’s new audit rules see angry revolt (telegraph.co.uk)
- Michel Barnier moves forward to break up Big Four audit firms (telegraph.co.uk)