Wow I always hear people talking about why Silicon Vally cannot be reproduced in Europe, but I have never seen anyone put it so pointed. Thanks for education someone in the States about the realities of some areas of Europe.
Things vary on many axes, though. I'm pretty sure that, in Silicon Valley, if you came out and said you would never hire a woman or an old person, you would be fired immediately and blackballed from managerial positions for life (or if you were the owner, sued into oblivion). Meanwhile, in Hungary, I'm going to guess Jakab Andor keeps his job and will be free to hire or not hire who he likes--- because Hungary presumably doesn't take antidiscrimination laws as seriously as the US does.
(Also, there's much less corruption in the US, which is probably the key difference.)
I agree, that this problem is the most obvious with small companies. But I think that even on the national scales these regulations harm those, whom they aim to protect. It's a wrong concept to treat the employer and employee like enemies. The good concepts would be win-win-win scenarios. For example, goverments should REDUCE the cost of hiring the handicapped instead of forcing companies to hire them.
A government can't say "no prenancy until you have saved enough to raise your child without working", it's unenforcable.
If you force companies to pay for women being pregnant and raising children, companies hurt. If you force companies not to pay, women hurt because pregnancy means instant unemployment and loss of income. If government pays, everyone pays in taxes even startups and people with no children (but at least the cost is spread widely). If nobody pays and it's left to charity, women and children live in poverty and suffer from that.
In individual cases, a couple can choose when to have children such that they can win no matter the situation, by deciding to save, or arrange to live on one income, etc. But I don't see any win-win scenarios that can be enforced from outside by legislation. Can you?
For example, goverments should REDUCE the cost of hiring the handicapped instead of forcing companies to hire them.
How could they do that (without charging you taxes to pay for it)?
"How could they do that (without charging you taxes to pay for it)?"
Easy.
Let's say, in my country €760 NET is a very good salary. If I advertise the job, I get thousands of people to choose from. Some of them will be handicapped. Let's say there is a goverment regulations, that employing the handicapped is duty-free, like cigarettes at the airports. Now I have two options. I either choose somebody who isn't duty-free, and pay €1572 (the empoyee still gets only €760), or, if I'm LUCKY, I will find a somebody suitable for the job among the handicapped persons, and I can choose him or her for the job. That way I've cut my employment costs two half, without paying ANY taxes. It's a nobrainer, even if I have to make some changes in my office to accomodate it for the duty-free person. Because I can slash my employment costs into half on the long run, without paying 1 cent less Salary than to everybody else. And the state? It's a win-win-win. Now they have a lot less people to worry about.
Actually he says he wouldn't hire anyone, because he won't be attempting startups in the first place. You shouldn't get in trouble for your hiring policies when it is simply: "I don't have employees."
He's saying it in the context of pointing out problems and inefficiencies of the system. I interpreted it as "these laws designed to protect women and the elderly are in fact incentivising bad behavior by employers, and thereby doing them harm, not good."
if you came out and said you would never hire a woman or an old person, you would be fired immediately and blackballed from managerial positions for life
I took it as an example of why he won't hire anyone and why he won't even sell his apartment and start a venture. As such he would have no company to represent in saying those things. Further if you never hired anyone, I am pretty sure you could state your reasons in America and not run afoul of legislation. Now if you openly stated such and then hired only 25-50 yr old males, sure you are asking for it and are going to get it.
As far as I know the rant is about Hungary, not the European Union in general. Labour and tax laws aren't the same everywhere in Europe, and the Hungarian economy is hardly representative of the EU's.
Reproducing Silicon Valley is another story. Arguably it's very hard to do even in NY or other parts of US that are more or less similar to California. After all, labour law is just one of many factors. For instance, even with all that overhead, I bet it's still much cheaper to hire a bunch of top-notch, English-speaking programmers in Hungary than in California.
Define "top-notch". Because under my definition of the term, I would expect there to be very few engineers in Hungary that match that description.
IMHO, Silicon Valley works because it houses a hugely disproportionate amount of the very best engineers, and from my experience the top .1% or so of engineers open up possibilities that otherwise simply aren't there.
Yes, the capital is here, but I think that's an effect and not a cause. If you took Facebook and started it in any other place in 2004 (with just a handful of exceptions) with exactly the same access to funds I highly doubt it ends up as it is today.
And why are there so many top-notch engineers in SV? Because of the climate, because there are more natural-born engineers, or because many top-notch engineers have moved and move there because there is the capital and the best environment for startups?
And why would you expect Hungary to have very few top-notch engineers?
According to the dictionary: outstanding, notable, superior. Seriously, though, take any reasonable definition. If you asked me a number I'd say 1% but yeah, you could say top 0.1%. I can't see how that gives any more precise information though, given that we don't have a practical, objective way of measuring programming skills.
> Because under my definition of the term, I would expect there to be very few engineers in Hungary that match that description.
Why? I'd expect any country with >10 million people, very high level of literacy, a couple of good universities and internet connectivity to be home to a good number of top-notch programmers. I can't see how that's particularly controversial.
In any case I'm not sure why you're taking issue with this. I never said that Hungary has proportionally as many top-notch programmers as in Silicon Valley. My point is simply: hiring people in Hungary is no more expensive than in California in terms of U$; if you have a company with 20 programmers in SF you could sure find 20 replacements in Hungary and save on payroll.
Here's my minimalist definition of "top-notch engineer" in regards to Silicon Valley startups:
- has experience working in the early stages of a venture-backed startup
- went to one of the top schools in the world, such as Stanford, MIT, Harvard, etc
- has an extensive personal portfolio of software projects on which they contributed
My point is that Silicon Valley "works" because it has lots of people that meet 2 or 3 of these bullet points. There is no place in the world that really comes close.
Nobody is objecting that you can surely hire people cheaper in other countries, but for small companies the cheapest labor source is almost never the winner. It's far more important to have the very best engineers.
> - has experience working in the early stages of a venture-backed startup
This has no effect on someone's ability.
- went to one of the top schools in the world, such as Stanford, MIT, Harvard, etc
Those are not "top schools in the world". The only advantage they provide are great contacts and opportunities thans to those contacts. In terms of knowledge, many schools around the world (including many in the former Eastern bloc) provide excellent education.
> - has an extensive personal portfolio of software projects on which they contributed
Again, this has nothing to do with being in SV. Many bast-known open-source projects were started outside US (I'll leave it to someone else to list them, but I'm sure you can think of a few off the top of your head).
The world was a way different place 30 years ago. You couldn't reasonably have expected someone to have an extensive software portfolio or have experience at a tech startup. Now, both are commonplace among top hires.
The definition of a "top-notch" programmer is about how competently he/she can write required programs, not about how "commonplace" among Valley programmers are his/her biographical details.
ADDENDUM - An example of your bullet points working just as badly more recently than 30 years ago:
Eastern Europe is notorious for highly skilled engineers. Because careers in Engineering and natural sciences have a long history and have always been viewed as prestigious positions.
And not everyone has emigrated to California, some have but US emigration is just too rigid. Many of us would want to move to SV, but unless we want to endure H1B slavery status our doors are pretty much closed.
However if anyone out there wants to take a shot at hiring some of us as contract workers, contact me.
I am from a milieu with excellent Engineering talent and could easily build a 5-10 man team of excellent engineers at roughly 60.000$ annual price point.
Its a widely recognized fact here in Central Europe that the cheap good quality software developers offered by Eastern-European nations (Romania, I'm looking at you..) are a very competitive resource when it comes to tech growth.
Get your designs done in Austria with an International team, outsource the real work to your pals in Bucharest, and profit!
All companies started in Hungary, even if they later become US entities, chose to keep their engineering in Budapest, because talent is available, and for much less than in SV. Also, it's less saturated.
E.g. I had a chat with a VP of a chech-US startup and they were inquiring about the possibility of expanding in Hungary, because they satured their chech sources, but SV is too expensive / also saturated.
Also, companies like Morgan Stanley, SAP or Microsoft are not starting new offices or expanding in SV, but they are over here.
So, talent is available. In fact, this is so obvious that companies like Morgan Stanley et.al. showed up here, giving good salaries, making my job as a startup guy trying to hire much more difficult.
To be fair though, specific talent like "has worked with Hadoop for a year" or "has worked at Google on the core search engine" is not present here. Also, people are much more likely to prefer to work at a BigCo than in a small startup, compared to SV.
You will not experience the problems I pictured in the post, when you don't have to compete in Hungary. In other words, of course it makes sense to hire excellent Hungarian engineers, and sell the product elsewhere. Problem is, when you have to compete with companies, who do not pay their taxes, who do not pay social security after their employees etc, and their prices are HALF of your costs. And of course they have excellent contacts, and they will sue you with obviously false claims, and then you go to court, and loose. Then you will understand depression.
I would expect there to be very few engineers in Hungary that match that description
And you would be so incredibly wrong. Hungarians are smart. Smart like Americans used to be, back in the 19th century when an American who did his work out in the barn could revolutionize entire industries for breakfast.
Sure I understand that different parts of Europe are different, it was just nice to see someone explain it, because we in the states keep hearing regulations are overbearing in Europe. I understand that it's not all of Europe, and that was my point, we tend to get the rolled up news over here and not being close to the situation it's can be difficult to understand the dynamics. This article helped me understand the nuances of the gripe.
Hungary is a bit extreme, but there are many countries in the EU and in the eurozone with very similar problems. "Social protection" needs to be cut down in most of Europe, we cannot be competitive otherwise.
> even with all that overhead, I bet it's still much cheaper to hire a bunch of top-notch, English-speaking programmers in Hungary
Actually, towards the end of the post he delineates the real tragedy: nobody starts a legal small consulting business in Hungary, for all the reasons he states. It's cheap to hire hi-tech labor in Hungary as long as you just send checks to individuals and leave the government out of it as much as possible.
So the situation is that the gov't, through heavy-handed social legislation, makes it basically impossible to start a small business legally. Big business I suspect has ways and means of gaming the system and making a profit regardless. Bad for Hungary.
Europe (at least in my country, eastern Europe) has strict social security laws. Firms cannot fire a person if he/she takes a vacation for child care (men are encouraged to do that too!). The vacation lasts up to 2 years (IIRC). The time is paid for by the government, but you lose your highly-qualified and trained employee for 2 years.
Facts aside, I don't approve the author making such a big thing of it though it sometimes may be an issue (if you're hiring for a long project where replacing people is REALLY expensive).
In Spain you cannot fire a pregnant woman. It could be even illegal asking for it in a job interview... Recent laws allow the father taking the 50% of vacation for child care. In candidates lists -algo by law- there must be 50/50 men/women. So, definitely, Hungary is not representative from European Union.
It's illegal to hide your pregnancy from your employer. If you do so, you simply don't get compensated and expressly give the right to your employer to put the contract to an end.
In countries such as Canada or the US it is effectively illegal to ask any personal questions in a job interview (religion, age, social & family status, ideology). In Spain those kinds of things are the first questions a woman gets asked, and for most common jobs, children (present or future) in practice mean she won't get the job. I am not aware of any restrictions that discourage this practice or allow her to safely refuse to answer.
I know of at least one employer who privately boasts that when he needs to hire a woman, he will only hire a lesbian, to avoid this issue altogether.
I don't think it is fair to call somebody a moron for being unfamiliar with a topic that has, in many countries, been "neither seen nor heard" until quite recently.
He is certainly incorrect, but a moron? No, he needs correcting, not insulting.
I'm glad we can't reproduce Silicon Valley in the EU. I'd rather we had healthcare and education for all, a top quality transport infrastructure and a more equal society.
If we're going to build tech clusters, let's do it on our terms.
I'm not american, but I think your comment is in bad taste. The region is looking at an Argentina-style economic collapse. It's disingenuous to say you have better social programs when, you know, you might not have been able to pay for it.
Once again, I feel like pointing out it's not only Europe. The US is just as insolvent, and whatever chain reaction might start from Greece can/will reach any Western country at least. Asia is in better shape right now.
Every time a country takes on more debt, it means it's failed to live within its means. Very few countries have managed without taking on more and more thin-air money year after year.
Western economies are just a huge intertwined clusterfuck. Don't think you're safe.
Please explain which Asia? The Asia which has generations of poverty and casting and wants to do nothing about it? The asia that is largely influenced by super radical islamic clerics? The Asia that will die off soon because its birth rate is so low that it won't replace its aging population? Or the Asia that is so reliant on American and other Western consumers that they have to continuously deflate their currency in order to keep their citizens from revolting against what is one of the largest plutocracies of all time?
Sure the west has problems but nowhere near Asia's.
> The Asia which has generations of poverty and casting and wants to do nothing about it?
No, the Asia that has recently engaged in less gambling at the casino of the "financial services industry" than the West.
Generations of poverty? Well, that can be explained by human nature. Various "Elites" oppressing/abusing/killing people, and confiscating the wealth created by them. Our problem as a species is that the West consists of the same homo sapiens as all the Asian countries you have a problem with. In other words, our collective problem is that we're all human beings.
Fair enough. I actually do think there are countries that are in a better relative position than both the U.S. and Eurozone, but none that I can think of in Asia. Specifically, most of the Northern European countries (Finland, Sweden, Norway), Canada, Australia, and, surprisingly, Brazil.
Yeah, the Nordic countries seem to be in better shape, likely thanks to their heavy taxation.
The PIIGS countries have recently adopted "austerity measures", but for example here in Finland, our taxes and price-levels are so ridiculously high it's like we're in some kind of permanent austerity mode.
Our VAT was recently raised 1 percent, to 23%. It would be quite an accomplishment in the field of pissing away taxpayer money if Finland was broke. Oh wait.. even Finland can't get by without more debt practically every year. Go figure.
As for the overall shape various countries are in, at least Germany, The Netherlands and Denmark seem to be doing alright.
In Asia, I bet at least Singapore, Hong Kong, and probably South-Korea are in decent/good shape. Australia has a nasty property bubble going on, probably about to deflate. Same thing in China, but they've gone completely overboard what with all those ghost cities etc.
Healthcare for all? Not in Romania where in many cases you'll simply die if you can't afford to pay for treatment and very often for diagnosis as well if it involves advanced checks taken for granted elsewhere in the West. Poverty is the problem. And I doubt it'll get solved anytime soon given the business environment here.
But don't forget that in the Eu you pay less of your income for health - and a heath crisis wont lead to family poverty
Some one I know moved to the states (from the UK) working for citibank and was paying much more just for his health cover than he would for all the UK benefits.
Health crisis won't lead to family poverty? Is this true for all 27 member states? I've already pointed out that it isn't in Romania. What about the other East European members? Can anyone tell us?
There are degrees to this, bad health will cost you money and reduce your earning power in all the states. However if you fall in bad health in the northern states treatment will be paid for and dying as result of lack of health care is very rare.
There are a lots of misunderstandings about cost of firing, cost of employment, etc... in Europe. What is true is that it is complicated because every country is different, and some countries can be anal about one thing that others are not. A typical example: in France, you often have to consult union before having to fire people (especially true is big companies). The key point though is "consult". Whether they say yes or not is actually irrelevant (from a legal POV, that is).
I am also tried about the "stealing your money argument". In the US, the salary you get after taxes still needs to be used to pay health insurance and retirement. In continental Europe, that's part of the 'stolen' money. You can argue whether it is a good system or not, but an honest comparion is to e.g. remove the social contributions for health (around 6-7 % for a beginner engineer with a good degree), and pension (around 10-12 % IIRC). When comparing e.g. the US vs European country, this has to be taken into account (the graph in the OP is pure non-sense in that regard for the OP argument).
As far as Silicon Valley goes: from all countries I have been working in, Japan has by far the lower income taxation. Yet, it does not especially thrive in a silicon valley manner (I also believe California is far from being the state with the lower income tax in the US ?).
>remove the social contributions for health (around 6-7 % for a beginner engineer with a good degree), and pension (around 10-12 % IIRC). When comparing e.g. the US vs European country, this has to be taken into account
Then you'd have to remove our 7.65% for Social Security and Medicare (employers pay another 7.65% on employees behalf).
Both approaches seem to work well in various situations, which is why I'm skeptical of the value of these kinds of rants which lack comparative analysis. Apparently it works badly in Hungary; but works well in Sweden. It'd be more enlightening to read some analysis of the differences, since it empirically isn't the case that strong parental leave policies always and everywhere cause high unemployment, even if they anecdotally cause one dude in Hungary to not want to hire women.
(I'd personally guess that culture and corruption have more to do with the large economic differences between Sweden and Hungary than taxation or parental-leave policies do, so I think he's barking up the wrong tree.)
If it's really true that someone who just started work can immediately take three years maternal leave off, fully paid, and then be due 2.5 months accrued paid vacation time when they return, then I can't imagine how that could work. I don't know if it really works that way in Hungary though, or in Sweden for that matter.
In Sweden you wouldn't get 2.5 months of accrued paid vacation, it's more like 10 days, as the first 120 days (of 480) (pa/)maternal leave is counted towards vacation.
Then again you have the legal right to take 25 days of vacation per year, but not all of these have to be paid.
Sweden has a reasonable number of startups relative to its population: MySQL, Spotify, Wrapp, Mojang, Massive, Absolicon, etc. But I agree that the economies are quite different, which is why I prefer careful analysis (preferably based on data) to anecdotes.
How can the government mandating the kind of paid-leave in Sweden be good for a startup? Tell me how this sort of policy can increase a new startups short-term cash flow? You can't exactly advertize superior working conditions (Google w/ free food/massages/nerf guns/paid child-related leave) since you do not have any track-record of being the hot new startup. Even if you did have the best working conditions available having to pay out for an employee who is not producing anything would probably kill the startup.
Culture/location/talent/vc $ is what makes a company though and to some extent trumps unfavorable tax/labor laws, this is IMO why SV & California have most of the startups as compared to Arizona/Texas or why Scandinavia>Eastern Europe.
I'd say it's good for talent since you don't have to pick a startup depending on what benefits you get (vacation time, health insurance, parental leave) due to the government providing well enough to begin with. Of course employers here can differentiate by offering more vacation, privatized health insurance, pension deals, but the swedish government seems to provide a better package than most US employers do.
5 out of 10 friends have already done so. Sad thing is, it won't work on a European level. You can't just say, everybody move the fuck out of Europe. :)
The owner of a 100/1000/10000 people company has much more power than the employee in need of work negotiating his salary/working conditions.
Not everyone is a "rock star" employee that managers are bending over backwards to accommodate.
That doesn't mean that the rest of the hundreds of millions of workers have to work with whatever conditions they can arrange for themselves. If managers could have their way, everybody would be working 18/7 for substinence salary. A society has to make laws to protect the public from that.
Politics used to mean: "a way to protect the common folk from bigger powers".
Require equal paternity leave, and the author will be forced to consider married men just as risky a prospect.
Better solution: make the employment restrictions apply to a company of a certain size. A large enough company should be well-enough equipped to take care of its employees. A startup company isn't.
I am definitely not an expert on US discrimination law, but I believe that is actually the case to some degree-many of those laws only apply to companies with more than 15 people (eg Title VII of the Civil Rights Act of 1964).
I know that some only apply once the company goes past 50 people; I was working for a startup as employee #4 and was looking at the rules for paternity leave (with respect to my then imminent second child) around the time the company passed 50 employees, and it at least kicked in some features of California law, if not Federal law.
Indeed, OSHA is another. That is why a lot of small businesses, mechanics and machinists for example, purposely stay small. They can't afford to grow because of the increasing regulations. There were several studies at the time of the early-1990s recession and again about the time of the dot-com crash about this, investigating the causes of "non-growth", because most new hiring usually occurs in mid-size companies. I don't really understand why anyone surprised that the economy (especially unemployment) is still screwed-up this long with the hammering mid-size companies have taken in the past decade.
Even better solution: don't penalize any employers for their employees' reproductive choices.
If the state believes it's a good idea to have a parent at home, the money for maternity and paternity should come out of the state's coffers.
And I'd encourage everybody to be open about their plans to have kids or not. If this results in undue discrimination against people raising kids, offset it with a corporate tax break for employing people with dependents.
This would be really expensive, but probably cheaper than the costs that a destitute single mom or a poorly-parented kid can inflict on society. And at least the costs would be borne by everyone, and both businesses and their employees could be honest and plan realistically.
If he's not being compensated for the cost of finding and retraining an employee, then the state isn't really paying for the whole thing.
That said, small businesses, and even certain roles in bigger businesses, just can't deal with the kind of disruption this would cause, never mind the money. I think we have to be realistic that someone who wants to take imminent leave shouldn't be in those kinds of jobs, and no government program can fix that.
Maybe I don't have the perfect solution in my pocket, but IMO the right answer can't be that employees lie about (or conceal) their intentions, and employers equally are forced to find plausible reasons not to hire women (or to fire them) just to stay afloat.
This makes no difference. He would still have to find and retrain an employee if he just fired pregnant employees instead of them taking paternity leave.
"And I'd encourage everybody to be open about their plans to have kids or not."
I have been asked on two separate occasions by two different bosses making a decision about hiring me on a non-temporary basis about my plans regarding children. I was 18 and 20, and am a woman. No way was I going to say anything other than "I hate kids" regardless of the truth. I don't want an employer making decisions based on my ability to carry children until the day comes that I decide I want a child.
Though I'm happy that no one as disrespectful of their employees and immature as the OP is going to hire me.
We do have something pretty close to that in germany since roundabout two years. Either parent of the child may take paternity of up to 12 month in total. I think the mother gets a little extra time and there is a bonus of two month if both parents choose to take a leave of at least two month (so then it's 14 month in total). You get paid the lions share of the wage you had by the state. There's quite a couple of fathers that take at least the two extra month, but I actually know personally two fathers that opted for the full twelve month with their wifes taking the extra two. It will probably take another couple of years until that's widespread though. I can look up the exact details if anyone's interested.
I think this is a pretty good solution to balance the fact that it's women that need to carry the child - now companies have less of an incentive to penalize them for that.
Counterpoint to the idea in this article - I don't like the idea of at-will employment. I'll keep the political or ideological ranting off HN, but in short, I don't think that being able to fire any employee for any reason whatsoever is a good idea.
Interesting to hear how things are in other parts of the world, though.
EDIT: If you're downvoting, by the way, please leave a comment about why. I don't really care too much about the karma, but I'd love to hear why people disagree (and for the record, this comment is at -1 at the time I edit).
1. Anti-discrimination laws still apply, even in at-will states in the USA, but all that means is that the employer has to state that they fired the employee for ANYTHING ELSE, even if it's actually for a discriminatory reason.
2. Being fired without cause means gives greater opportunity for employers to abuse their employees - and, considering the general principles of game theory, it WILL happen.
3. Notice vs. cause can be separate things, but many people nowadays don't have the ability to survive longer than a couple of weeks to a few months without a job, and being fired without any notice can literally ruin someone's life.
Again, this is only a personal view - I'm no economist, and I don't pretend to have all the answers. So, please take this with several grains of salt :)
Those are certainly valid concerns, though that does bring in a lot of grey area definitions for valid reasons to fire someone that are hard to define :(
A wrongful termination suit is not based solely on the employer's reason for termination. That would be silly. Business owners are advised to document infractions so when they fire someone, they have written evidence in case a suit is brought against them.
I do agree that it will shift more power to the employees and it might help them in certain situations. But if you make it more difficult to fire a person, a business takes on more risk and loses more money when they hire someone who isn't good. Businesses will become less willing to take on new employees.
... but many people nowadays don't have the ability to survive longer than a couple of weeks to a few months without a job, and being fired without any notice can literally ruin someone's life.
I don't find that a valid concern. If you don't have a cushion of at least 3 months (better, 6 months, ideally a year), then you're taking a big risk. You're living above or too close to your means.
Sure, there are exceptions. Not everyone is in complete control of their situation. But I've found that most people could be, if they really wanted to be. Instead they spend money on unnecessary stuff (often including families at or below the poverty line), or feel the need to "keep up with the Joneses". And sure, there's a whole psychology behind all this that makes it understandable, but the bottom line is that you're taking a huge risk with your financial health by behaving this way, and there will be strong consequences if you lose your job.
I'm absolutely not in favor of stronger protections. I want to be able to -- by default -- quit on the spot. I've never done it, and hope I never have to, but I want the option, as the default. If a company wants to fire me for reasons relating to my competency, then bad on me. If I'm not creating enough value for the company, because they want or need to go in a different business direction, then I don't want to be part of that organization, fulfilling a useless role. (And also bad on me for not getting myself into a position where I'm creating enough value.) If a company wants to fire me for a political or discriminatory reason, then I really don't want to work for them anyway. Life's too short for that crap. (Not saying that we shouldn't have protected classes and try to police discrimination, though.)
Admittedly, I'm at the "high end" as far as the workforce goes, as I'm sure many others here on HN are. My skills are in high demand, I'm good at what I do, and I'm able to live happily well below my means. So it's likely true that I don't "know how the other half lives". And frankly, I don't want first-hand experience. I want to keep my skills sharp and make myself valuable whenever and wherever I can. Maybe someday I'll find myself in a bad situation, but I have to believe that I'll have the skills and work ethic to keep myself on my feet.
Because the labor market isn't perfectly liquid. Let's say a manager randomly decides that he's firing all the blond haired people in his company. Those people will be harmed. Even if perfectly competent at their jobs, they very well may not find another job right away. It may even be the case that an equivalent job doesn't exist nearby and the employee is SOL if forced to quit without planning. Furthermore, once the company fires all the blonde haired people and this becomes known, there will be cases where competing jobs can now offer less pay because it knows a competitor is no longer willing to hire blond haired people.
Now, you might say "the company that fires all the blond haired people will eventually die at the hands of a company that gains an advantage by accepting blond haired people." True, but it's a slow bleed, and that certainly doesn't help the blond haired people who were arbitrarily fired.
In case you're skeptical, all this and more can be observed in the case of US black people up until the civil rights era.
I like the idea of an employee being able to quit at a moment's notice, and that goes hand in hand with the ability of an employer to make the same choice.
To be honest I find the idea of paternalist employers rather revolting.
I actually agree with your point there - if the employee wants the privilege of being able to quit at a moment's notice, they should also be willing to give up their employment protection. However, if the employee is willing to give notice, then there should be equal protection for the employee.
Right, but my opinion is that the protection option should be the default, with employee (and employer!) free to negotiate a mutually beneficial agreement.
In my mind, it's a matter of inertia - if "protected" is default, then if an employer wishes to have the ability to fire anyone at will, they need to offer concessions - whether it be a higher salary, or the ability to quit at will, or whatever.
However, if "not protected" is the default case, then it becomes far more difficult for an employee to obtain such protection, as it's not beneficial to the employer. And as such, barring anyone who can negotiate their own contract (the minority, generally), most people will remain unprotected. And I believe that to be a problem, for reasons I mentioned elsewhere in this comment thread.
In many jurisdictions it's not possible (i.e., not enforceable in court) to sign away your statutory rights. This protects those with less power/resources (employees).
"""I like the idea of an employee being able to quit at a moment's notice, and that goes hand in hand with the ability of an employer to make the same choice."""
Not even remotely the same.
Because those two, worker and employer do not even remotely share the same power...
Agree. In a startup or a small business, the employer is the weakest. He/She must pay a high enough salary to get a competent worker, must pay for training, must pay salary while the worker is employed even if the company is not making money, must be aware and comply with labour regulations or risk a fine...
The employee just has to show up and do a barely acceptable job to get a steady pay.
Please see my response to kiba, below. I'll reiterate, though - it's a personal view, and I'm no economist, so please take it with several grains of salt :)
Would be interested to hear your thoughts on competing individual rights inside a capitalist society. More specifically the company owners right to make a profit versus the employees right to make a salary. Interested to know your opinions on why the employers rights supersede those of the employee.
I think you're confusing "rights" and "freedom to persue".
Capitalism is about free trade and voluntary exchange (of whatever); "right to profit" and "right to salary" sound both horrible and rather anti-capitalistic.
Actually agree with you that maybe I shouldn't have gone for capitalism to get my point across. But then again aren't you confusing the concepts of "free market economy" and capitalism with the former just being one possible form of the latter. Another possible form being a "social market" which should allow for some kind of state intervention on a lot of the issues being raised here.
PS A genuine thank you for engaging in discussion as opposed to hit and run downvoting
Among other things: it puts your entire staff in a short-term thinking mode.
If I'm walking into work every day wondering if my door badge is going to work that day (one of the psychologically damaging aspects, IMO, of door badges -- I've had co-workers comment "well, I've still got a job" as they walk into the office) based on the capriciousness of a boss (some of whom are very capricious), well, I'm not going to be focusing particularly on the long-term elements of my position. In fact, I'm going to be spending a fair bit of time looking at alternatives and networking.
In ecology, the growth you get in an environment that's continuously disturbed and disrupted is best described as "weedy". There may be vegetation (and even some animal life), it's not going to be particularly productive. What you're getting is lifeforms that are selected for survival capacity, not, say, wood or food production, or even necessarily stability.
Nial Fergusson, though frequently not the best guide, does point this out in his Ascent of Money, noting that one of the requirements for successful and productive economic activity is stability. This applies equally to firms and individuals. Many of the structures we've adopted (debt, savings, finance, subsidized mortgages, various "golden handcuffs") exist either to buffer change or incentivise stability.
Kicking (or threatening to kick out) the legs from under someone isn't that.
Unfortunately, there's also been a lot of cargo-culting built around this: people in the U.S. who bought houses to ensure personal financial stability .... because buying houses is what financially stable do. Unfortunately, that's confounding cause and effect. You buy a house when you've got an assurance of lifetime (or at least long-term) employment, in part to help cement you with that employer. Similarly, establishing large lines of credit (or revolving debt): useful when you've got a reliable, if perhaps fluctuating, income stream to meet those debts.
Anti-discrimination measures, seniority rules, tenure, unions, labor review boards, and the like, all seek to change the power balance of the employer/employee relationship. Which, for any employer with n>1 employees, is greatly skewed in the employer's favor. While this may make for an economic climate which doesn't expand as quickly, it may also make for one that's more stable in a downside movement. Looking at economic growth between the US and established (e.g.: not modernizing, BRIC nations) economies, particularly in Europe and Japan, might be instructive (I haven't done the analysis). However northern Europe (particularly Scandinavian countries) have done quite well over the past 20 years or more.
If your landscape is rapidly shifting and/or doesn't sustain the level of existence you're trying to establish, you're going to want to move elsewhere (physically or figuratively), reduce your needs, or strengthen your foundations.
As to Mr. Andor's statements concerning his employment growth plans and policies:
1. He could move his business to a more hospitable environment.
2. He could find himself competing (successfully or otherwise) with those having different policies. This is "letting the market sort it out".
3. He could petition his government for changes in law and/or practice that better suit his business goals.
I'm not sympathetic to the arguments he provides, and suspect that he'll find that he's greatly limiting his enterprise's growth prospects by foregoing any possible payroll expansion.
Hah, I'll freely admit that I'm not experienced with the "other end of the cat", as it were. But I do stand by my personal principles, even thought they might be inconvenient. And as I mention in my reply to InclinedPlane, I'm not saying that I'm completely opposed to the concept - but rather that at-will should be a contractual option, rather than a default.
I am simply saying, in a very simple way, that opinion on certain topics is only valid when it comes from the right perspective. This has nothing to do with personal principles or morality. It's business (and reality) 101.
BTW, I say this from the perspective of having lived on both sides of that equation. I've even done things like not taking home a paycheck during bad times in order to make payroll and keep people employed. Business isn't black-and-white and it is usually far harder than it looks from the outside.
Who has the "right" perspective, the employer or the employee? This is what contract negotiation is about. Both sides are right and both sides are wrong, and the contract is the compromise.
"""Start a company. Hire some people. Run it for, say, ten years. Come back and review what you just said."""
Even if he disagrees then, so what?
Company owners/directors vs employees is a 1:x ratio, where x can get to 100,000 and more.
The law should protect the general population (employees) more than the few directors.
And if you are worried about other companies having an unfair advantage make this mandatory in all states. And penalty-tax international goods imported from countries without something similar.
Else, you are competing with the lower common denominator, ie. with what people are willing to do in a poverty stricken country somewhere on the world, where even kids are allowed to be put to work, etc.
Which is unfair to both you and to them (because it makes it possible to perpetuate their relative misery as a "strategic advantage").
The counter argument isn't that directors should have more power at the expense of employees, it's that the harder it is to fire someone, the less likely a company is to take on employees they don't absolutely know they will need for a very long period. This slows down the entire economy severely which hurts employees much more than directors (harder to get a job in the first place, less options for switching jobs if you don't like your current). This feeds into the political system: When most people are in employments for life, and has never had to justify their own contributions and have no pressure to keep their skills up to date, they will not (broadly speaking) support politicians who will diminish their rights, leading to further entrenchment.
The current state of the Spanish economy, particularly the crippling high youth employment is the primary case study for this situation.
You can get this right now in many state university systems in the US if you want it. Especially in the case on non-exempt employees. Unless the employee does something criminal I would say it would takes a minimum of a year to fire someone but probably more, and with clever enough employees it can be nearly impossible. Because of seniority and the like it can be really hard to layoff a specific employee even when there are budget cuts that eliminate positions.
Here's the problem. Bad employees tend not to leave of their own free will, in my experience the worse they are the more this is true. However, really good employees tend to move on every few years as they grow into new opportunities. What this means is that every time you replace a good employee you roll the dice that you'll get a bad one. There is now one position that is likely locked in place with bad employee. Over time this leads to a lot of bad employees, which in turn lowers your retention rate of good employees.
Now there is a standard tactic to fight this (and this same tactic would work in your senario as well). Make the bad employee extremely uncomfortable. Within the rules of the system do everything you can to make work suck. This does work reasonably well. The problem? Terrible employees are immune to this. So if this tactic is abused you end up with only terrible employees.
So in short, without the ability to fire people easily you tend to go on a downward spiral of increasingly bad-mediocre employees.
It absolutely can, and as noted even if it works you still run into issues.
The overall problem is that in the end it becomes a game between bad employees and the management see how can play the rules against the other the best, which is a phenomenal waste of time and energy.
Improve your recruitment, hire good people. Take advantage of any probation period. In the UK this is generally 3 months, and can be extended. During this period employees are just 'at-will'.
In the UK it can be up to 11months and 3 weeks before the main employment laws kick in.
If you're downvoting, by the way, please leave a comment about why.
I think the comment is too political and lacks content. The Guidelines say: "Please avoid introducing classic flamewar topics unless you have something genuinely new to say about them." Although I don't wish to be a jerk, I also don't think the comment meets this criteria. So I downvoted it.
In reading comments, I try to upvote those written by people with special knowledge or insight, usually gleaned from particular experiences in the field or unusual reading / insight. I often downvote those that seem to lack such insight, or be random, or that don't have "something genuinely new to say," or that are too overtly political.
I'm not downvoting you because I disagree with you—I actually haven't given much thought to the issue of at-will employment versus government-mandated employment and so don't really have an opinion—but because of the lack of content in the comment.
Consider this hypothetical:
You don't like the idea of at-will employment. How do you feel about the idea of being able to quit your job at any time?
You're relying on your employer for an income, this is true, and thus being fired in a way you don't feel is justified seems unfair. Naturally.
Your employer is relying on you to do a job and has invested (lets say hypothetically) in your training, and thus you leaving arbitrarily (say you got a better job) seems unfair to them.
One solution to this would be employment contracts that require you to stay at the job and the job to remain open to you, for some period of time under certain conditions.
Would you accept giving up the right to leave arbitrarily in exchange for the employer giving up the right to fire you arbitrarily?
Actually, this is the common case at least in Germany, and also in a bunch of other European companies. Employment contracts have a termination time that's usually 3 months; if the contract doesn't state anything it goes up even higher over time.
In Poland it works the same. For the first few years it's one month termination time both ways, then 3 months. But many people work on "junk contracts" that does not offer any such protection, and allow employer to pay less taxes (skiping social insurance etc).
We also have paternal vacations, but much shorter - 20 weeks to share between father and mother. And employers still complain that it's too much.
"How do you feel about the idea of being able to quit your job at any time?" - Very strange things are happening here. For example, if you become homeless, you can't exercise your freedom to be on the streets anymore. If you're on the streets, you are _fined_. If you can't pay up, you are prisoned. Now it's easier to see how unjust this is. You will feel less sympathy for a small business owner, who can't exercise his or her freedom to give a job to whoever he or she wants, until he or she wants on whatever terms they agree. But soon you may find yourself "protected" by the state in a very similar fashion, how our poor homeless people are now protected in Hungary.
What if we replaced "employee" with mechanic? Would you be in favour of making it illegal for people to switch mechanics 'at-will'. Then you would have to prove that your mechanic was terrible before you could use someone else.
Wouldn't you consider a mechanic a contractor? And you should be able to end a contract with a contractor too (depending on the terms you signed together). An employer/employee relationship is (at least legally) a whole different kettle of fish.
The laws differentiating between a contractor/employee vary based on country, state, etc. But at the core they are the same thing. One party is providing compensation in exchange for a service.
People that oppose 'right to work' and 'at-will' employment tend to not understand this until you put them in the position of the party that is providing the compensation. Once they are forced to pay for a service they do not want/need/like they are less likely to support laws like the ones in the article.
Good point about services that you don't want/need/like but is an employee really providing a service? Isn't some onus of responsibility on an employer as the One in the position of power? I think employing someone should be a long term commitment that involves education to bring them up to a level that you consider good enough. Otherwise shouldn't you just outsource the work?
Employers typically impose must more stringent requirements than a typical contract. For example, I can have multiple car mechanics, but typically can't work multiple jobs, and have multiple on back up if one falls through.
In Australia, you have to have a reason to fire someone, unless your company is small (<25 people?). That reason can be a great variety of things, but if they haven't done anything that you can pin on them as 'dismissably wrong', you can retrench their position instead. This is a way of saying "it's not you, it's us", but the catch is that you can't hire someone else to do that role for 6 months, ie: you're being held to your claim of 'downsizing'.
IANAL, but "at will" doesn't actually mean that a person can be fired for any reason, even without cause. That's something employers say to discourage lawsuits. It's not actually true.
"At will" means there's no contractual agreement and an employee can be terminated for documented performance issues or for business reasons (i.e. layoffs) without it being treated as a breach of contract.
In a contractual arrangement, for either party to walk away (even for business or performance reasons, unless stipulated) is a breach. In at-will employment, it's not a breach of contract. That's not the same thing as saying that people who are unjustly fired (e.g. pregnant women) have no recourse.
That said, it's usually not in a person's interest to pursue a wrongful termination lawsuit. It's much easier and less risky, in most cases, to get another job.
"At will" means there's no contractual agreement and an employee can be terminated for documented performance issues or for business reasons (i.e. layoffs) without it being treated as a breach of contract.
That's not true at all. You are misunderstanding contract law. An employer-employee relationship is a contractual relationship, even if not formally memoized in writing.
"At will" simply means that the length of the employment arrangement is not defined, and continues so long both parties agree it shall continue. If either party decides it should not continue, that party may end the arrangement (the employee by quitting, the employer by firing). An at-will employee can be fired for any reason, so long as it is not one of the prohibited discriminatory reasons (i.e., age, gender, etc.). There is no need for the employer to document the reasons for termination, though many due as a matter of course (usually, to defend against discrimination lawsuits).
That said, it's usually not in a person's interest to pursue a wrongful termination lawsuit. It's much easier and less risky, in most cases, to get another job.
LOL. If a person is fired for discriminatory reasons, it is definitely worth the effort to sue. In addition to salary for the period of reasonable unemployment, they are also entitled to punitive damages (usually 3x actual damages).
I know someone who got a six-figure settlement because he could establish that the process leading to his termination was atypical-- that he didn't have the same amount of time to improve performance and the same opportunities (i.e. transfer) as other people in the same circumstances. This wasn't a discrimination claim. He was white, male, and in his late 30s. IIRC there is language (at least in NY) covering people who are terminated and not given the same process as someone else. Companies aren't required to have a termination process, but if they have one and don't follow it, they can get in trouble, unless there was obvious cause to fire the person on the spot (i.e. he did something illegal or dangerous).
It could be that the firm was more worried about image than losing the lawsuit, but my point is that it's not that simple. You may not be able to get wrongful termination, but there are other claims. Example: you don't get along with your boss and (instead of getting fired) you try to transfer to another group. If this works, great. If it doesn't, because said boss said something negative about you to the manager of the group you're trying to transfer into, then he interfered with your relationships elsewhere in the company. Get him for harassment, IIED, et cetera.
LOL. If a person is fired for discriminatory reasons, it is definitely worth the effort to sue.
I said "usually", and I should have qualified that with "for most HN readers". If you're 55 and on the cusp of retirement, or if you're a member of a minority in an obvious discrimination case, it makes sense to sue. If you're a 25-year-old white guy in finance or technology, it's usually not worth it to risk your reputation, because lawsuits go into the public record.
Guess what? People are messy. But more importantly, people are valuable.
The author can whine all he likes. But really, try getting something done without them. Oh, wait, he says he's not going to even try... why are we reading this?
I'm not so sure. If I had to keep an employee for 3 years while they were on vacation I would just not hire any employees. Or I'd move somewhere with sane business laws.
Haha you sound like you're from the region. That and proxy employment agencies, and the employees end up with a lower salary (agency takes a cut) and lower protection. Ironically predictable.
Imagine this combination: brilliant, an MSc in CompSci, being over 50, female, not white, and an immigrant.
I tried to get her hired for the IT department where I worked. Instead she was cheated out of her pay and fired before the standard employee trial period ended. Standard practice for the place. (900 employees in four years, avg occupancy of 50 workers, anyone mid-level and up is white only, and as soon as a project was over almost everybody is fired, continuity of work is not the issue).
I've heard all the same excuses before in a much friendlier business environment. All in an attempt to treat people like they are not human beings. I know nothing about the author and I'm not disputing the realities of business in Hungary. But damn I want to shoot the message.
And a swath of downvotes in an attempt to do so is worth that...
And this is, in large part, why startups work so much 'better' than larger companies.
Startup hires tend to be somewhat self-selecting, as the jobs tend to draw young males without families. The risk of the job makes it more appealing to those types, but the field is generally overrun by men, which is a topic that seems to come up every few months as well.
What that means is that the eco-system is better for lean startups. You don't have to have the 'buffer' budget over actual costs that corporations do. Large companies typically offer paid vacation, matching 401k, disability leave, maternity leave and all that jazz.
If you're working on a lean startup right now, ask yourself what would happen if your lead developer disappeared for three months.
This is one of the real disadvantages we face as a nation because, in large part, the people we outsource labor to don't have these protections.
What? How exactly was he describing a non-lean company? Hell, he was angling his wife as a supplementary source of income, and his home as investment capitol!
I do not understand. Is your comment even related to the article at all then? This whole article is about how startups don't work in Hungary, and you're talking about how this is evidence why startups are so much better?
I believe you're either taking my comments out of context or are predisposed to bias against it for some reason.
The point of the article is that employees are expensive. Certain types of employees are potentially more expensive than others. He wants to avoid hiring the low-risk people, but isn't allowed to. The self-selection of startups is... y'know what? I'm just repeating what I said originally.
The hardships encountered in Hungary are the same sorts of hardships that large companies have to put up with, to varying degree. That was the basis for my comparison.
If you don't get it, sorry. I honestly don't know how you read the article and read my post and don't know how they relate.
I think you're right; you don't understand. He's taking the arguments made in the sub as to why it's hard to start a business in Europe, and extending them to the inherent competitive advantage of startups over large corporations elsewhere. The fact that startups largely don't have to deal with the issues described in the sub, while large corporations do, contributes to this advantage.
I don't know if I buy it.
Startups have plenty of benefits from being unbureaucratic, willingness to take risks, and small enough to pivot.
I think that the fact that they pretty much only employ middle-class white men under 30 is a pretty significant brain-drain, though, as people with experience age out so quickly, people from other fields don't join, and there's a monoculture of viewpoints.
While what he says may be true, without employees, his business can't scale. What he is describing is the difficulty of startups competing against established competitors who have a reliable source of revenue. In many countries, smaller businesses get some form of exemption.
That blogpost made me kind of like a celeb, a bloghero or something. Fact is, that single blogpost generated half a million pageviews, 91141 Facebook likes in a matter of days. It was covered on national television, I was "the blogger of the week" at the biggest local blog provider (blog.hu), a whole bunch of responses were written by big names in the trade.
Newmedia analysts were trying to figure out what made it such a big meme, out of the blue, from totally nothing, without any mainstream media promotion. People shared it like hell, on Facebook. Likes were rising by hunderds, by the second. Like this: 30145, F5, 30359 ...
The right-wing Hungarian government changed the law of work relations. This rant was part of the campaign to gather support for the initiatve. It represents a very popular opinion, but popular does not mean true. For your information:1. Is it almost impossible to get a job if you are over 35; 2. Several people over 55 were fired recently. There are horrible stories.
More and more you are compelled to own the corporation that represents you in business. So we can get around onerous government regulation. We are taxed to pay for the private-public crony-capitalism complex. It may be costly or unconscionable for me to hire you--or to be hired and paid as an individual taxpayer--and let that money go freely into corruption. But we can hire the other's company. How your company uses its money and treats its employees is your business.
I submitted a post about this at one point, but Hungary is going through really terrible cultural and political troubles. I really feel for the Hungarian people - in that context, the frustration in this post makes much more sense.
The solution to all such problems is as obvious as it is unlikely to happen. It's not "women get six years' vacation if they want it". It's not "at-will employment". It's complete freedom of contract in the context of secure, effective, and responsible government.
You and your employer come to an ex ante mutually beneficial agreement. A secure and effective government will enforce such a contract, unless it represents an egregious abuse by one of the parties. A responsible government will formulate a wise definition of egregious abuse.
Once you start to enumerate all unenforceable contracts, you will come to understand how far we are from this situation. And when you look at how insecure, ineffective, and irresponsible governments are, you'll see why we may never get there.
In Russia if you don't minimize taxation with tricks and do it straight, you pay like 1,2$ for each 1$ your company makes. So mostly companies aims for super profitable niches, like selling chinese shit with 1000-5000% margin.
Or you have the 'official' salary of $50/month, and you get the rest paid to you in cash in the envelope each month.
Well, at least that's how things were about 10 years ago when I left - it could have changed a lot.
There was some economist who estimated that if a business in Russia pays EVERY tax it's supposed to by the law, it will pay way over 100% of the profits in taxes. So technically there is no business that is following the law 100%, giving the 'controlling organs' the power to ask for bribes. Could be an urban legend though, I don't have links.
Edit: The parent talks about general taxation, and my take is about the taxes a company has to pay for each employee on top of her salary. Still, I think, "white" and "grey" salaries is an interesting point.
My ex was Korean. Her dad worked at an insurance company, and every month he got his (tiny) official salary as well as an envelop full of cash, which was 4x more money. I asked her about it and she said small companies are normally completely "off the grid" from a tax standpoint, so mid-sized companies need to do this to compete. And they all do.
She opened a bar and never, you know, registered as a business or kept books or did any of the other business things you'd need to do in the US to stay out of jail.
Her impression was tax receipts come mostly from the giant chaebol like LG and Samsung.
OK, thanks for the information! I wonder how all those small companies manage their cashflow though. Can they receive money to their bank accounts just like they would if paying taxes? It's kind of difficult to imagine they're all shuffling cash around.
Most big businesses in Russia work with grey schemes. One of the reason not so many foreign companies here, as they forbidden to pay bribes. Yet most people get payed in white. Some hire people by contracts as invidial entrepreneurs so they don't pay 54% of taxes for them, plus theese employes pay only 6% from their salaray instead of 13% to government.
Dmitriy Potapenko sounded this number, when were interviewed about taxation in Russia and Czech Republic. And he owns big retail networks, restaurants and etc. For example McDonalds to cut taxes is working as shops, not as restaurants :)
This was a really long, enjoyable article. My question is, how does the company that he works for manage to pay him enough to buy a 90k flat? Are they shaddy like the other companies he described? Is he shaddy and not paying his taxes? How did his employer manage to do it and why can't he just follow that path?
Maybe he simply inherited it. Maybe he works for Google Hungary or other international company (overall charging rate he has mentioned in article does not look that bad in international context).
What really looks bad how Hungary's laws make companies noncompetitive. E.g. higher employment taxes means people will work in other EU countries if there is possibility.
The author realizes that these 5 restrictions don't even apply in Silicon Valley, right?
1. I can fire you, if I want to.
California has at-will employment, but you sure can't fire someone based on gender or age anywhere in the United States—and he opens with his desire to do just that.
2. If VAT goes down to at least 20%, better yet 15%.
Sales tax alone is not 20%+$.01 anywhere in the Bay Area, but there are a surprising number of added taxes here and there—Healthy San Francisco, for example, or the California state gasoline taxes—that can make the surcharges on consumer goods add up to that level.
3. If the state takes away "only" 30% of your money.
Federal income tax + California state income tax + FICA significantly exceeds that for most people in the technology industry in Silicon Valley.
4. If higher income is not exponentially punished.
The US certainly does have a progressive income tax scheme.
5. If the states punishes corruption instead of decent companies.
No-bid contracts, anyone? The US is hardly free of corruption.
He's asking for a place that doesn't exist. Moreover, it's a place I wouldn't want to live in; I don't want to live in a place where it's legal to discriminate against minorities, in particular.
It is a very grey area. Too much government regulation and how the hell can it be profitable to hire someone. Too little and individuals get borked if they get pregnant/sick/etc.
Personally I would sacrifice less pseudo stability for less regulation. I believe many problems start off with good intentions, especially when it comes to more regulation.
I think you guys didn't quite catch his point... he doesn't hate women and children, he hates that the state forces him to employ a person for 3-6 years! without working. I support maternity leave but that's ridiculous if true.
I don't know how it works exactly in Hungary, but I doubt that the woman on maternity leave would cost him much, if anything. He probably simply has the obligation to hire her back after the leave.
In all fairness, the author just said that he would like to be able fire any worker, even if they were pregnant women/young moms or older folks, which instead have a special protection that would make it impossible even if they're not working well. [BTW, I personally agree with a special protection for pregnant women, but the costs should be on the State]
This is exactly what I meant: That the cost should be distributed on all businesses/people and not just on those businesses which hire young women/potential mothers. This does more than pay itself with a higher participation of women in the workforce; it's just a distribution of risk without adverse selection as with mandatory car insurance.
The cost should not be distributed. The cost should go directly to the business that is employing these women. If a business employs anyone they hope to do so by creating more value then the value then is spent on the employee. Even if the cost could be distributed, it has little impact on the fact that when the women goes on leave she is taking some 'business knowledge' that will take time to replace. The ability to even determine the value lost is impossible except under very general assumptions.
Car insurance isn't compulsory in all states (assuming you are from the US, but most require it). In NH you simple have to prove the ability to provide personal responsibility. If the roads were private, then it should be up to the owner of the road whether or not insurance is required.
Isn't there a major anatomical part of the disappointing gender discrimation from this post that everyone is neglecting? Men have babies too, they may not carry them to term but they are undeniably a major part. Shouldn't the problem be considered that society forces women to be the ones to take responsibility over the child after it is born? Then companies use this to punish women because they may take a "vacation". How is caring for a child while your husband is allowed to choose what he does a vacation?
Rather an extension to your logical argument (not disagreeing or agreeing): Either men should take paternity leave to let the women work or then they should support the family financially.
More generally:
Having children costs something, because it requires work input. Who pays for the children? The men, women, families, their employers, the state (=also people who don't have children)?
Paternity (as opposed to just maternity leave) is for me the solution to many problems. Here in Sweden this already exists (18 months to be shared between parents as chosen, with some extra for the person actually physically giving birth for time spent in hospital during pregnancy). There is even some debate about having to use 9 of the months for each parent.
Possibly a necessary means to end (if you believe in this kind of logic) but hopefully not an end in and of itself.
(Already got enough minus points for pointing out gender issues and advocating free education so may as well dig myself even deeper :) )
>California has at-will employment, but you sure can't fire someone based on gender or age anywhere in the United States—and he opens with his desire to do just that.
I don't think you understand his position at all. Trying to fire someone in Europe is often compared to adopting a child, lawyers will take cases against former employers on commission because the probability of winning the case is extremely high. There is no comparison when it comes to US at-will employment, for eg. you have to be able to prove that the employee you fired for coming drunk to work was really drunk, that you gave him written warnings, flowed the formal procedure etc. To be fair tough, employers often use employment agencies that exploit loopholes but it only serves to increase the cost of labor. The only ones benefiting from these laws are the public sector and government owned company employees (ironically even government owned companies resort to exploiting loopholes because even they can't operate under the regulation). And these are probably much higher percentage of workforce than in the US.
And the corruption he is talking about is tax evasion and gray market, that's a huge part of the economy in these countries.
Also, I'm thinking the "progressive tax" in the US kicks in at a much higher nominal amount then Hungary, and that it's disproportionate to the cost of living difference.
My wife was fired when she was pregnant, because she was pregnant - which is illegal here in Italy - and they were so kind as to write so in a letter (never underestimate human stupidity/arrogance). We're taking the case to court, and I can tell you that there is no "on commission" here in Italy (also forbidden by the law).
OK, I don't know about Italy so fair point "Europe" is too broad. But still you've confirmed his point about not wanting to hire women, especially if Italy is comparable in maternity leave. And don't tell me you aren't expecting to win this case.
As a matter of fact, businesses not wanting to hire women is a problem in Italy, even if guaranteed, paid (by a national "insurance" agency) maternity leave is just 5 months here (usually 2 months before birth, and 3 after).
5 months don't look as too much to me; this notwithstanding many businesses only hire young women if they sign a blank resignation letter (which of course is illegal too, but very difficult to prove). I agree it's a very complicated matter.
The best solution imho would be to have more state-subsidized childcare solutions (we have some, but much less than needed), which would make young mothers more productive for employers, but I understand that most free-market advocates wouldn't agree :)
PS Yes I expect to win the case, because my wife's former employer so patently broke the rules. But here in Italy justice is so slow (next month there will be the first hearing, 8 months after we sued) and compensations so little that very often employers get away with it. I decided to go to court more to defend a principle than for an economic reason.
Well the point is - what's wrong with firing them ? If it's easy to fire someone it's also easy to hire and if they want to and hire her back afterwards or arrange some acceptable maternity leave and things like being available on-phone or one two days a week two months after birth, etc. that would not be possible under the "protection laws". Is she any less skilled after delivery. You could also accept a different pay, etc. But the point is there is a cost to the employer and regulation just reduces market flexibility and creates situations where it's tougher for a women to get the job in the first place. And as far as I know you get benefits for child, especially in the first year, from government, I'm not sure what's the situation with that in Italy.
It's wrong if they fired her because she is pregnant (and about to take the maternity leave I presume). Its almost the equivalent of firing a male employee who accrued a lot of leaves (by not using any) and about to use them.
Benefits per child are very very low here, and many couples don't have children because if the woman loses her job, with the added expenses too, it will become very difficult to make ends meet. Also for this reason Italy has one of the lowest birth rate in the world (second only to Spain, if I recollect correctly).
With generous (eg like in France) benefits per child, or generous unemployment benefits for young mothers, I could agree with more flexibility. The problem is, benefits cost immediate money from the State while putting the burden on families and businesses only costs in the long run. Given our current debt, the choice is very limited...
I think fiscal burden as opposed to regulatory burden is much less costly to the economy and the inflexible job market creates structural problems and prevents innovation, but at this point - with the interest rates countries such as Italy have to pay - I don't see that happening.
I think the best thing countries in Europe could do is implement something like a negative income tax and kill all that regulation and special programs/taxes/bureaucracy but I haven't even heard anyone in Europe propose such a move.
I can assure you that there is a lot of talking about that. Right now, there is serious discussion here in Italy about taking away some job protection from those who have too much (usually older people) and give some more to those who have none at all, through some kinds of contracts (usually younger people).
I don't think that deregulation is always right, but it is when you have too much - and we do have too much regulation, too much discretionarily applied.
But that's just talking about labor restrictions, and it's standard political bickering, nothing revolutionary will come out of that, Europe is too populist for any real change to happen. What I'm talking about is restructuring the tax/welfare system with something like this : http://en.wikipedia.org/wiki/Negative_income_tax
Eliminate paper currency and only have digital transactions, force the banks to disclose accounts and transaction information to remove gray economy and use NIT scheme instead of all the special programs. That way everyone get's the same safety net when they are unemployed or poorly paid and you can have unregulated at-will employment because employees aren't forced to negotiate for bare minimum.
That's illegal through all the Europe and that's OK and how it should be. We are speaking however about possibility to fire person who harms company intentionally.
P.S. 3 years maternity leave in Hungary looks really bad IMHO.
And I - sincerely - wish you all the best, and I hope you will win. I'm not against decent, and fair laws that protect women's rights to pregnancy. But it's a national issues. The state must cover the bill. When they try to get the bill payed by the employers, it backfires, and at the end of the game, HARMS women, who can't get enough good jobs.
I'm from Hungary, and I never heard of anyone suing their employer after getting fired. I'm not saying it doesn't happen, but you have to realize that the US is super-litiguous, E.European countries in comparison are at the other end of the spectrum: it doesn't really occur to people here to sue after losing their jobs. It's just not part of the culture. Also, private individuals can't afford lawyers, and don't want to deal with them.
As a neighboring Croatian I'm not 100% certain about Hungary but it seems very similar, so I think you need to chat with a few lawyers about this, the case about guy getting fired for coming to work drunk and then being rehired and the employer forced to pay the salaries in between because he couldn't prove his claim isn't made up :)
In much of the world people will complain to a government department if they are discriminated against, and expect the department to investigate impartially.
It is typically only in high-value cases (ie, C-level executives, sexual harassment cases where high levels of damages are expected etc) where people usually seek private representation.
Of course they do sue. There is the whole "Munkaügyi Bíróság" (Work Court or whatever) to deal with the zillion lawsuits against companies firing people. And I'm not saying it's wrong. I'm saying, more often than not, these regulations backfire, and harm those, whom they should protect. Goverments create an environment in which employer and employee see each others as enemies, literally. They promote this view. Here I experience public anger against companies, investors, banks, especially multinational companies, but even smaller companies, who look successful. "Workers" see companies as their enemies. This is plain wrong, and bad, and nobody benefits. Only the corrupt, inefficent, incompetent goverments.
Yes, you're right. My point was that Hungary is probably still better than say the United States, which is famous for being a very litigious nation. Unfortunately, I can't find number to back up my gut feeling.
Just as an added fact, for those who don't know it, Hungary is currently ruled by an extreme right-wing party which is pretty much doing away with democracy.
Edit: The EU is considering if measures should be taken; I hope they will, and fast.
I hope Hungary will not get financial aid from IMF and ECB (if I remember correctly) or will make it extremely hard to get it. That will harm Hungary in short term but in long term it will be good for all the Europe. It will send very good signal for all other Europe countries where right-wing extremists do stupid things (especially Eastern Europe).
P.S. I'm from Eastern European country and I see some similarities with Hungary.
I would like even more the EU to have a direct way of dealing with this kind of situations, but for now I agree with you - that's the fastest way to pressure the Hungarian government.
The current Hungarian government is not extreme right-wing, but surely undemocratic. But they changed the work code in favour of Mr. Andor Jakab. There is a new mass movement against the government, based on the trade unions. A new democratic government would mean an unhappy Mr. Andor Jakab.
Maybe, but they are true. Small companies sometimes just don't have the money. I heard about this hairdresser shop that was about to get bankrupt as four of it's six employees were on maternity leave at the same time.
Ok it's rare occasion that 4/6 would reproduce at the same time, but if the owner nice enough to hire mostly just graduated hairdressers, it starts to look possible.
Sounds like a place where businesses are actively discouraged. I wonder how the guy who (hypothetically) buys his €90K apartment made his money? Probably from running a €9/hr shop under-reporting revenues.
After the first paragraph I was already thinking "Wow, I don't want to work for E760 per month, that's basically on the poverty line!"... then I checked where the guy was from; Hungary is a backwater, and absolutely NOT representative of the EU, probably not even of the old eastern bloc.
Three-years maternity leave? That's unheard of in western Europe, most countries allow for less than a year (my wife got 6 months in the UK); men only recently started to enjoy some rights in that sense (in the UK it's two weeks).
He talks about a post-50 "protected age" where you can't fire people. That doesn't exist in the UK, where we have the opposite problem (firms firing people near pension age, and then hiring youngsters at 1/3rd of salary). I know in other countries laws are tighter (in Italy it's fairly hard to fire people, for example), but as people say over there, "Facta lex inventa fraus" (as soon as a law is written, a way around it will be found"): in countries with rigid laws, firms now hire almost exclusively on a temporary basis, i.e. they hire people as contractors for years or even decades, abusing the relationship.
The high taxes and pension contributions are also a factor in Italy and in France, but not elsewhere.
What this post is representative of, is the general douchebaggery of European "entrepreneurs"; they usually come from "old money" (banks are very conservative with their lending, favouring entrenched players) and bring a terrible mindset to the workplace, i.e. "screw the employees, they're just idiots anyway". This obviously doesn't motivate workers, keeping productivity low.
Arhh yes, the open source VPN software that LogMeIn decided to buy that they essentially broke the app with a software update to then force everyone to pay (I don't have the exact figure) something like $200+ a year to use.
> Three-years maternity leave? That's unheard of in western Europe, most countries allow for less than a year (my wife got 6 months in the UK);
9 months is the "baseline" maternity leave in Finland. My sister had a baby and ended up being away from work for almost two years. She just started working again this week, and the same company was legally obligated to take her back.
If you have someone gone for a year in a small company, that's a huge problem. It's not that they're remote for the year, they're gone. They don't know the new staff, work, projects, etc.
One of the favorite words around here is "pivot" and ponder how a company can pivot successfully with some of these considerations. Sometimes a pivot will completely change a product, business model, industry, etc and the company has to hire or layoff people accordingly.
It sucks by all measures (I've been on the wrong end of that), but ponder how much more difficult that gets when some of your staff is untouchable.
Even if it's not a problem, it changes your mindset and gives you yet another thing to worry about.
Not all the ex-socialist block have 3 years maternity leave. Here in Bulgaria it is 9 months and it is payed by the state (from social security fund).
Also the taxes are a lot lower. You have medical insurance (cost of having non-payed health care system: 8%) + social insurance (pension, unemployment compensation, maternity leave: 22%). This insurances are calculated on base up to 1000 euro - so your insurance taxes are max 30% of 1000 euro even if you get more than this level. Over the rest of the money you have 20% flat state tax. On every purchase you have 20% VAT.
Being an entrepreneur is like that: high risk, high stakes, high stress, (hopefully) high rewards. That's how it works. If you want to reduce risk/stress, then you would have to accept less rewards. No employer will ever accept that, so i don't see why workers should accept to suffer in order to make his life easier.
As an entrepreneur, it doesn't make sense to accept no profitability though, and that's what the original article was all about. Trying to maintain profitability in the face of all the obstacles he mentioned.
Yes this is the same sort of individual in the UK that pops up from the CBI crying wolf when ever anything changes in employment law - claiming that its hard to fire people.
Actually its not, employers always have the whip hand - what they are complaining abotu is that its harder to act in grossly bad ways in the UK.
I'm an entrepreneur from the UK living in NYC on an E-2 investor visa. The key factor in employing people in NYC is the 'at-will' employment : Just as I only have to give people one day's notice, so they are only obliged to give me the same. The reduced 'friction' in the system means that I can grow a company much more quickly - and not have a trailing obligation if an employee doesn't work out. This is a huge benefit compared to the UK. You may point out that this gives me incredible power over my employees : But it works both ways - somehow wages for those employees are higher than they would be in the UK...
As for maternity leave, the same issue exists in the USA, to the extent that any firing of an employee has to be non-discriminatory. As for health-care : That's a very expensive nightmare in the USA, and it would be far more efficient IMHO for it to be wrapped into a % tax levy, rather than flat monthly rates (but that's a rather political statement in the US).
Hungary is a backwater, and absolutely NOT representative of the EU, probably not even of the old eastern bloc.
Unfortunately, it is. For example, the median salary in the Czech republic (the western-most "eastern Europe" country, also in the EU) in 2011 was around 630 Euro (net), which is about $10k per year (net).
I also cheer for the lofty let's-share-the-social-burden ideals that people present in this thread. But I fear these folks are just blissfully oblivious of how their money is redistributed and where it really ends.
I would just add that you can make money with such a system, you only need to find a business with more added value (difference between cost and price). And this brings to a whole lot of other topics such as if it is fair for a State to raise the bar in such way, so that less added value businesses simply cannot exist, if this improves growth and unemployment in the long run (I don't think so). Etc.
The title should be "why I don't give you a job without doing tax evasion".
In Romania it's about the same: the taxation for an employees is high and so is social security (pregnancy leave, difficulty firing, etc). But people don't complain as much because tax evasion is really high.
Of course, this is really annoying for me because if your customer is in the US they will not pay you behind the counter, they will do a wire payment or such, which goes straight into accounting and is taxed.
In this regard, tax evasion becomes unfair competition.
Some companies are preferring contractual work and abusing it, by putting clauses in the contract that employees cannot quit for the next 5 years. This works in the cases were employees need to travel a lot (for example) and in the contract it is stipulated that if you quit, you have to pay the costs of accommodations, food and "training" provided during the contract, which is not feasible for most people.
This IMHO, is equivalent to modern slavery. If you're not able to quit, you cannot complain, you cannot negotiate a higher salary and you are at your employer's mercy.
It's only fair if employers cannot fire people at will (without being sued to oblivion). "I can leave anytime I want but you cannot fire me" doesn't make sense.
(For the record I am for at-will quitting and firing)
I assume in any relationship both parties can abuse their position.
But, as an employer, I feel I am clearly at a disadvantage.
It's easy to put clauses in a contract, but it doesn't actually mean they could be enforced in a court of law, even in one as bad as Romania's.
Having seen the restrictions the local Labour Department (ITM) puts in place, including the kind of stuff you may add to a contract makes me doubt what you say is more than a scam. I have never seen such a contract nor do I know somebody in IT working under such conditions.
Even a non-compete clause is something that I cannot add to a contract because it's super-expensive. According to the law if I want a non-compete on an employee, I have to pay him at least 50% of his salary for the duration of the non-compete.
There are many restrictions in place because companies don't play by the rules either. Some things I've seen in practice: civilian collaboration contracts, which have far less restrictions than regular working contracts; collaboration contracts with authorized individuals (PFA); minimum wages declared, to escape taxes, the rest of the salary being paid illegally.
Also, I know of at least one instance in which the owner of a company asked his employees to sign their resignations, without a date added. He can fire anyone when he feels like it.
I have never seen such a contract nor do I know
somebody in IT working under such conditions ...
IT is one of the very few privileged classes in Romania. People working in IT are blessed. It does happen a lot less in this field and usually the fraud committed is more subtle, but it does happen. I was talking about my godson btw, he's not working in IT, but he is a knowledge worker and he has 3 years of his contract left.
Also, asking for a return of "subsidies" is completely legal.
Even a non-compete clause is something that I cannot
add to a contract because it's super-expensive.
IMHO, non-competes should be banned completely. And I'm glad that you are unable to add it to your contracts ;-)
This brings us back to my original comment where I said that generally companies do tax evasion in Romania and most "job creation" involves a certain degree of tax evasion. I guess the same happens in Hungary too.
About firing, it does seems fair to me: an employee can just quit at any time with no reason so a company should also be able to fire at any time.
They way I see it, asking for a return of "subsidies" should be regulated some more. But not outright banned since I can clearly see some situations where it would make sense.
I am able to add non-compete to a contract, it's just not worth it because the ex-employee will still be getting at least half a salary each month. I don't see why they should be banned.
On non-competes - because the potential for abuse far outweigh the benefits for employers. It is also a way to subvert the free-market rules.
In California non-competes are not valid, except for equity stakeholders. Silicon Valley is in California and clearly the lack of this privilege hasn't done much harm to businesses - quite the contrary, if the correlation with their success in the software industry says anything about it (the same argument could be made pro software patents, however software patents have only began to be seriously accepted / enforced recently - and I feel like Silicon Valley will see a decline because of it).
We are a 3 people company doing software and we all do teleworking. (We used to be 4 people in 3 cities, now we are just 3 in 2 cities.)
So, I don't see how much my position as an employer impacts my employee's daily experience. They are free to do what they please, they just have to perform some work on a laptop for 8 hours a day.
The disadvantages are many for a company, starting with the fact that you have to play by the rules that are enforced by various entities that usually can't wait to fine you.
Firing an employee is rather complicated [1] and you are not allowed to do time-limited contracts much. So, once you hire somebody you do it "for life".
In a small company I would say any employee influences about as much my life as I influence theirs. I had a guy quit on me out of the blue this year (got another offer) and it was a bit of a shock for my business -- I'm not certain there is anything I could do that would impact an employee that much except suddenly firing him, which is restricted as I've just said.
1. Actually they changed the law recently, it might have become less complicated, not sure...
The thing (in many European countries) is that government doesn't 'steal' your money, but that out of every salary you have to pay for many different things. Income tax is only one aspect.
For those interested, this is the reality in my country, Slovenia, which borders Hungary (I may have botched some numbers regarding taxation, but the principle behind calculations stands):
1. Out of every monthly salary you pay: income tax, state/public pension fund, health insurance and also a small tax (<1%) called parental security.
2. A woman or a man may take up to 12 months of parental leave, which is fully paid by the state. The government uses money from 'parental security' tax to pay for this privilege. It works, because at any given moment there are many,many more employees not on parental leave than those on parental leave.
3. A woman is entitled to sick leave during pregnancy if her doctor makes such decision. So it may well be that she is absent for two years from her job. And it is also true that many women abused this privilege simply by convincing their doctors that they 'cannot perform on the job while pregnant'. A few years ago there's was a sort of clampdown to this practice by tightening the control on the doctors' decisions. So it's not that pervasive anymore.
4. A woman is also entitled to reduced workday (only 4 hours instead of 8) while her child is under 6. Her salary is of course halved, but state covers her pension fund as if she worked 8 hours. Many women don't decide to use this option, simply because a halved salary puts a lot of strain to majority of families' incomes.
5. Regarding firing workers: similarly to Hungary it's very difficult to fire someone and almost impossible to fire pregnant women or old people. Therefore, majority of people under 35 don't have regular contracts, but they work via independent contracts or the so-called self-employment companies (you establish a company in which you are a sole employee and then go work to another company which pays you via your small company). Needless to say, job security is practically non-existant if you aren't on regular contract.
6. Progressive income tax is also here, however it's not as brutal as in Hungary. Lower salaries (<1k euros) are actually not taxed that much. The problem is only that the highest tax bracket (41%) comes already at 2k euros and that hits middle class the most. We, skilled professionals, are usually complaining the most about this fact. There are discussions to change this taxation in order to stem the brain-drain. It's also important to know that progressive taxation is applied on 'past-the-post' principle: e.g. you are taxed 41% only for your income that goes over a certain amount. This means that if your salary is 2k euros, you'll be taxed 41% only on income past 1.5k euros, that is 500 euros will be taxed 41%, 1.5k euros 27%.
7. Grey economy/tax evasion is certainly a problem, however the tax bureau is becoming more and more powerful and it's connected with banks. It's actually not that easy to cheat anymore. That goes for majority of people/businesses, richest top 5% still game the system by moving the money to Cyprus/Luxemburg shell companies and so on, but this can't really be helped unless it's solved on EU level.
Ok, I'll stop now :-). If you have any further questions, then do ask.
Australia will tax residents for offshore assets. Most countries don't. Of course, it's easier to cheat (as the banks overseas may not co-operate), but that might change with more international co-operation.
I remember reading a story about a wealthy Australian that went to court regarding his offshore assets. The assets were under a trust that locked him out of making any decisions, automatically triggered when he became a defendant in such a court case.
That's still far lower taxes than I pay in the USA. SS, Medicare, State, Federal really adds up.
Federal 25%(over 34k), Medicare 15.3% (below ~120k cutoff), Medicare 2.9%, Virginia 5.75% (over 17k /year). Now many people get tax breaks for various things but 50% income tax rate is fairly common for the upper middle class without much in the way of a safety net or public heath care.
It's not quite that straightforward, is it? State taxes are federally deductible. And virtually everyone in the upper middle class owns a home and takes a whopping deduction on mortgage interest, and property taxes are also deductible.
I'd also push back on "not much in the way of a safety net". I'd like universal single-payer health care, but in the meantime it's worth remembering (a) once you hit retirement age, you very much do get public health care, and (b) retirement age is when you're most likely to incur medical expenses.
If he's in Virginia (I was there 9 years), it takes a significant income to have a home. My old one bedroom condo at 835 sqft was 240k in 2005. A single family home in a reasonable neighborhood starts at $300k pretty easily which is easily 2-3x prices here in Austin.
The problem is that salaries in DC aren't double Austin.. they're more like 1.3-1.5x.
Also, once you're about the 50k threshold for income, some of those deductions - like for student loans - start decreasing and disappear.
You might just as productively debate the whole concept of the progressive income tax scheme, because the mortgage interest tax deduction is probably the most popular deduction in the code.
Although I don't in fact like the progressive income tax scheme, I don't see why it isn't possible to critique this aspect of it while supporting the concept at large.
I generally don't agree with your premise, that it's unfair to advantage homeowners in the tax code. I think society as a whole benefits from increases in home ownership (homeowners are stakeholders in neighborhoods). I think the tax code can either be simple or effective.
You are free to disagree at length with both of those beliefs and I won't fault you for doing so, except that if the best argument you can muster is "no fair, I just want to rent" I may roll my eyes.
But the thing I really wanted to point out is, there are 104905480 things we can debate on HN where a change of perspective might be productive. This isn't one of them; the mortgage interest tax deduction is a psychological pillar of the middle class of the US and eliminating it would be painfully disruptive to huge numbers of voters.
Narcotics will be decriminalized nationwide before we lose deductible mortgage interest, is my prediction. People have strong feelings about drugs, too, but the decision to legalize them or not doesn't change whether they can still afford the cable bill.
"You are free to disagree at length with both of those beliefs and I won't fault you for doing so, except that if the best argument you can muster is "no fair, I just want to rent" I may roll my eyes."
This is fundamentally an issue of the tax code, once again, favoring those who are well off while disadvantaging those who are not.
The mortgage interest deduction is subsiding those who make the choice to reduce their labor mobility; why would we subsidize people who want to reduce their competitiveness in the labor force?
Hopefully the mortgage interest deduction will go the way of ethanol subsidies.
The equivalent UK benefit (MIRAS[1]) was abolished by the Conservative party, which out of the two main parties would be the right wing party of home ownership. It can happen ...
High levels of home ownership causes long term economic harm by preventing people from moving around in response to better job offers etc. More importantly the mortgage tax credit simply increases home prices vs. making them more affordable. The reality is it's wildly understood as a bad idea economically, but it's so popular it's simply being chipped away by capping it and not indexing the cap to inflation.
That 41% that I've mentioned is just income tax on my brutto salary. Pension fund is ~15%, health insurance 8.5%. In addition to my taxes on brutto salary, the employer is levied additional taxes for my health care and my pension (so called employer's mandatory participation). In total, the cost for the employers quickly adds up, so (for example) 3000EUR brutto will give me 1700EUR netto and the total cost for employer will actually be 3483EUR.
Just want to point out that if 8.5% is getting you single-payer health insurance without deductibles, it's still a better deal than the prevailing rates for low- (not no-) deductible private market health insurance in the US.
My experience so far in Hungary - and I expect Slovenia to be pretty similar is that you can't really compare the benefits between state provided medical in Central/Eastern Europe to what can get through private insurance in the U.S.
I never knew someone in the US that had to get cash to the doctor on the side or bring their own toilet paper and food to the hospital.
That's not what I'm talking about. I'm saying you can't just compare costs straight across by looking at taxes vs. premiums because in the health care system here there are a number of hidden costs.
I had a friend who broke his arm. The emergency room doctor wouldn't touch him until the family provided some cash.
If you have to provide extra bedding, food and toiletries for a hospital stay on your own - those costs aren't reflected in the taxes that one pays for health care.
This has nothing to do with debating the merits about either system, I'm purely talking about trying to accurately compare the costs.
I'm asking seriously: how much cash? Couple hundred bucks?
The system you describe is obviously corrupt, and I sympathize with the frustration, but I might prefer a system where I had to spiff doctors a couple bills to get an arm set over a system where I could be both insured and bankrupted by minor surgery that happened to snag a loophole in my policy. That's the private market insurance system we have in the US.
I'm not sure what he payed and that was a while ago. Most Americans that I know in Hungary, when they need something done they go to Austria.
I lived in the US most of my life. The health care system there is pretty messed up - in my opinion. But when I moved to Hungary I realized I'd been quite naive about how things are here.
I assumed it was a rather cut and dry fact that health care would be better here - and it isn't as simple as I had assumed.
I'm not exactly sure what grandparent is implying. Health care in Slovenia is actually pretty nice (you most certainly don't need to bring your own food or anything else in the hospital) and covers most of the situations you might encounter in your life, with one ugly exception: queues for some non-life-threatening operations and/or examinations. Most notorious being orthopedic surgery. It turns out that what isn't life threatening today, might become very dangerous for your health in the timespan of several months, before it's your turn to be operated on. So many people who get stuck in queues pay additionally from their pockets to get the necessary examinations/operations as soon as possible in privately owned medical establishments. Another funny thing stemming from this fact is that many doctors/surgeons work in public hospitals four days a week and then privately a day a week or some similar arrangement.
... and don't forget the other things we don't include in our taxes here, but that are covered by your taxes in many other (especially European) countries: health care, retirement, disability insurance.
These numbers don't add up for me. I make just over six figures a year and my effective tax rate at the end of every year is roughly 20% (according to TurboTax). Single, no kids, no house.
As tptacek pointed out you are ignoring that the state tax is federally deductible and that the income tax rate at the 25% bracket is the marginal rate.
The key to taxes in the United States is that they are broken up into a large number of categories. 20% sounds about right for "Federal Income Tax", but that's only counting the largest tax of 4 or 5 taxes levied directly on salary.
At that income level (around 100k/yr), the tax federal taxes reported to you on your last pay stub of the year should be around 28%, when you count FICA (6.2%) and Medicare (1.45%). Add to that whatever your state income tax is (most states have an income tax). As an example, I have to pay 4.63% to the state of Colorado. I think most states that impose an income tax are within a few percent of that. Then add the hidden employer side of payroll tax (another 6.2%), and you end up with a figure that is close to 40% of income.
Minimum standard deduction and a single personal exemption will remove a few percent from this figure at filing time, and you can delay tax payment through 401(k) contribution, but it is still a very heavy tax rate. It is just well hidden from the average income earner by putting the taxes into a number of buckets.
I'm a little uncomfortable talking in specifics here, but I'm not close to 50% effective tax. IL's state income tax is 2 points lower than VA's (or was until recently) but that's 2 points.
20% sounds low to me too (makes me wonder whether he missed FICA), but add all them together and you're still not giving half your money away.
Anyone idiot or indeed a wise man can crank out an opinion or even cliched abuse but don't you find it more interesting when they bother to offer a counterpoint or an argument or pertinent further evidence regarding the issue?.
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[ 6.4 ms ] story [ 406 ms ] thread(Also, there's much less corruption in the US, which is probably the key difference.)
Anything that increases the base costs of starting a business, such as these, will reduce entrepreneurship.
He might be a HR manager in a larger company with good resources, happily hiring all kinds of people for all we know.
If you force companies to pay for women being pregnant and raising children, companies hurt. If you force companies not to pay, women hurt because pregnancy means instant unemployment and loss of income. If government pays, everyone pays in taxes even startups and people with no children (but at least the cost is spread widely). If nobody pays and it's left to charity, women and children live in poverty and suffer from that.
In individual cases, a couple can choose when to have children such that they can win no matter the situation, by deciding to save, or arrange to live on one income, etc. But I don't see any win-win scenarios that can be enforced from outside by legislation. Can you?
For example, goverments should REDUCE the cost of hiring the handicapped instead of forcing companies to hire them.
How could they do that (without charging you taxes to pay for it)?
Easy.
Let's say, in my country €760 NET is a very good salary. If I advertise the job, I get thousands of people to choose from. Some of them will be handicapped. Let's say there is a goverment regulations, that employing the handicapped is duty-free, like cigarettes at the airports. Now I have two options. I either choose somebody who isn't duty-free, and pay €1572 (the empoyee still gets only €760), or, if I'm LUCKY, I will find a somebody suitable for the job among the handicapped persons, and I can choose him or her for the job. That way I've cut my employment costs two half, without paying ANY taxes. It's a nobrainer, even if I have to make some changes in my office to accomodate it for the duty-free person. Because I can slash my employment costs into half on the long run, without paying 1 cent less Salary than to everybody else. And the state? It's a win-win-win. Now they have a lot less people to worry about.
I took it as an example of why he won't hire anyone and why he won't even sell his apartment and start a venture. As such he would have no company to represent in saying those things. Further if you never hired anyone, I am pretty sure you could state your reasons in America and not run afoul of legislation. Now if you openly stated such and then hired only 25-50 yr old males, sure you are asking for it and are going to get it.
Reproducing Silicon Valley is another story. Arguably it's very hard to do even in NY or other parts of US that are more or less similar to California. After all, labour law is just one of many factors. For instance, even with all that overhead, I bet it's still much cheaper to hire a bunch of top-notch, English-speaking programmers in Hungary than in California.
IMHO, Silicon Valley works because it houses a hugely disproportionate amount of the very best engineers, and from my experience the top .1% or so of engineers open up possibilities that otherwise simply aren't there.
Yes, the capital is here, but I think that's an effect and not a cause. If you took Facebook and started it in any other place in 2004 (with just a handful of exceptions) with exactly the same access to funds I highly doubt it ends up as it is today.
And why would you expect Hungary to have very few top-notch engineers?
According to the dictionary: outstanding, notable, superior. Seriously, though, take any reasonable definition. If you asked me a number I'd say 1% but yeah, you could say top 0.1%. I can't see how that gives any more precise information though, given that we don't have a practical, objective way of measuring programming skills.
> Because under my definition of the term, I would expect there to be very few engineers in Hungary that match that description.
Why? I'd expect any country with >10 million people, very high level of literacy, a couple of good universities and internet connectivity to be home to a good number of top-notch programmers. I can't see how that's particularly controversial.
In any case I'm not sure why you're taking issue with this. I never said that Hungary has proportionally as many top-notch programmers as in Silicon Valley. My point is simply: hiring people in Hungary is no more expensive than in California in terms of U$; if you have a company with 20 programmers in SF you could sure find 20 replacements in Hungary and save on payroll.
- has experience working in the early stages of a venture-backed startup
- went to one of the top schools in the world, such as Stanford, MIT, Harvard, etc
- has an extensive personal portfolio of software projects on which they contributed
My point is that Silicon Valley "works" because it has lots of people that meet 2 or 3 of these bullet points. There is no place in the world that really comes close.
Nobody is objecting that you can surely hire people cheaper in other countries, but for small companies the cheapest labor source is almost never the winner. It's far more important to have the very best engineers.
This has no effect on someone's ability.
- went to one of the top schools in the world, such as Stanford, MIT, Harvard, etc
Those are not "top schools in the world". The only advantage they provide are great contacts and opportunities thans to those contacts. In terms of knowledge, many schools around the world (including many in the former Eastern bloc) provide excellent education.
> - has an extensive personal portfolio of software projects on which they contributed
Again, this has nothing to do with being in SV. Many bast-known open-source projects were started outside US (I'll leave it to someone else to list them, but I'm sure you can think of a few off the top of your head).
ADDENDUM - An example of your bullet points working just as badly more recently than 30 years ago:
Cevat Yerli when he started Crytek
And not everyone has emigrated to California, some have but US emigration is just too rigid. Many of us would want to move to SV, but unless we want to endure H1B slavery status our doors are pretty much closed.
However if anyone out there wants to take a shot at hiring some of us as contract workers, contact me.
I am from a milieu with excellent Engineering talent and could easily build a 5-10 man team of excellent engineers at roughly 60.000$ annual price point.
Get your designs done in Austria with an International team, outsource the real work to your pals in Bucharest, and profit!
...Oh and they cost roughly 70% less
However I am getting massive down votes here, for something that is neither rude, neither false, neither off topic.
I find this kind of attitude (not even bothering to teach me a lesson if I erred) very rude.
E.g. I had a chat with a VP of a chech-US startup and they were inquiring about the possibility of expanding in Hungary, because they satured their chech sources, but SV is too expensive / also saturated.
Also, companies like Morgan Stanley, SAP or Microsoft are not starting new offices or expanding in SV, but they are over here.
So, talent is available. In fact, this is so obvious that companies like Morgan Stanley et.al. showed up here, giving good salaries, making my job as a startup guy trying to hire much more difficult.
To be fair though, specific talent like "has worked with Hadoop for a year" or "has worked at Google on the core search engine" is not present here. Also, people are much more likely to prefer to work at a BigCo than in a small startup, compared to SV.
I understand what you're saying, and it's true, in fact I've worked at small companies and been subject to it.
My post was specifically meant to refute the parent's point that:
"I would expect there to be very few engineers in Hungary that match that [top-notch] description".
And you would be so incredibly wrong. Hungarians are smart. Smart like Americans used to be, back in the 19th century when an American who did his work out in the barn could revolutionize entire industries for breakfast.
Actually, towards the end of the post he delineates the real tragedy: nobody starts a legal small consulting business in Hungary, for all the reasons he states. It's cheap to hire hi-tech labor in Hungary as long as you just send checks to individuals and leave the government out of it as much as possible.
So the situation is that the gov't, through heavy-handed social legislation, makes it basically impossible to start a small business legally. Big business I suspect has ways and means of gaming the system and making a profit regardless. Bad for Hungary.
Facts aside, I don't approve the author making such a big thing of it though it sometimes may be an issue (if you're hiring for a long project where replacing people is REALLY expensive).
I know of at least one employer who privately boasts that when he needs to hire a woman, he will only hire a lesbian, to avoid this issue altogether.
What a moron. Lesbians have children too. From my own anecdotal information on this, about in the same proportion as heterosexual women.
He is certainly incorrect, but a moron? No, he needs correcting, not insulting.
If we're going to build tech clusters, let's do it on our terms.
Every time a country takes on more debt, it means it's failed to live within its means. Very few countries have managed without taking on more and more thin-air money year after year.
Western economies are just a huge intertwined clusterfuck. Don't think you're safe.
No, the Asia that has recently engaged in less gambling at the casino of the "financial services industry" than the West.
Generations of poverty? Well, that can be explained by human nature. Various "Elites" oppressing/abusing/killing people, and confiscating the wealth created by them. Our problem as a species is that the West consists of the same homo sapiens as all the Asian countries you have a problem with. In other words, our collective problem is that we're all human beings.
The PIIGS countries have recently adopted "austerity measures", but for example here in Finland, our taxes and price-levels are so ridiculously high it's like we're in some kind of permanent austerity mode.
Our VAT was recently raised 1 percent, to 23%. It would be quite an accomplishment in the field of pissing away taxpayer money if Finland was broke. Oh wait.. even Finland can't get by without more debt practically every year. Go figure.
As for the overall shape various countries are in, at least Germany, The Netherlands and Denmark seem to be doing alright.
In Asia, I bet at least Singapore, Hong Kong, and probably South-Korea are in decent/good shape. Australia has a nasty property bubble going on, probably about to deflate. Same thing in China, but they've gone completely overboard what with all those ghost cities etc.
Some one I know moved to the states (from the UK) working for citibank and was paying much more just for his health cover than he would for all the UK benefits.
It's not the best, but you won't go broke if you have any sort of health emergency.
I am also tried about the "stealing your money argument". In the US, the salary you get after taxes still needs to be used to pay health insurance and retirement. In continental Europe, that's part of the 'stolen' money. You can argue whether it is a good system or not, but an honest comparion is to e.g. remove the social contributions for health (around 6-7 % for a beginner engineer with a good degree), and pension (around 10-12 % IIRC). When comparing e.g. the US vs European country, this has to be taken into account (the graph in the OP is pure non-sense in that regard for the OP argument).
As far as Silicon Valley goes: from all countries I have been working in, Japan has by far the lower income taxation. Yet, it does not especially thrive in a silicon valley manner (I also believe California is far from being the state with the lower income tax in the US ?).
Then you'd have to remove our 7.65% for Social Security and Medicare (employers pay another 7.65% on employees behalf).
(I'd personally guess that culture and corruption have more to do with the large economic differences between Sweden and Hungary than taxation or parental-leave policies do, so I think he's barking up the wrong tree.)
Then again you have the legal right to take 25 days of vacation per year, but not all of these have to be paid.
Or perhaps Sweden has a strong enough economy to compensate for the harms caused by this policy, but Hungary does not.
Billion-dollar companies don't have to worry about it nearly as much as tiny ten-man ventures.
Culture/location/talent/vc $ is what makes a company though and to some extent trumps unfavorable tax/labor laws, this is IMO why SV & California have most of the startups as compared to Arizona/Texas or why Scandinavia>Eastern Europe.
for example, in hard times, or to pay debts, allow to sell oneself into lifetime slavery.
The owner of a 100/1000/10000 people company has much more power than the employee in need of work negotiating his salary/working conditions.
Not everyone is a "rock star" employee that managers are bending over backwards to accommodate.
That doesn't mean that the rest of the hundreds of millions of workers have to work with whatever conditions they can arrange for themselves. If managers could have their way, everybody would be working 18/7 for substinence salary. A society has to make laws to protect the public from that.
Politics used to mean: "a way to protect the common folk from bigger powers".
Better solution: make the employment restrictions apply to a company of a certain size. A large enough company should be well-enough equipped to take care of its employees. A startup company isn't.
If the state believes it's a good idea to have a parent at home, the money for maternity and paternity should come out of the state's coffers.
And I'd encourage everybody to be open about their plans to have kids or not. If this results in undue discrimination against people raising kids, offset it with a corporate tax break for employing people with dependents.
This would be really expensive, but probably cheaper than the costs that a destitute single mom or a poorly-parented kid can inflict on society. And at least the costs would be borne by everyone, and both businesses and their employees could be honest and plan realistically.
It does. The state pays for the paternity leave. The author's point is that he still has to find a replacement worker for those three years.
That said, small businesses, and even certain roles in bigger businesses, just can't deal with the kind of disruption this would cause, never mind the money. I think we have to be realistic that someone who wants to take imminent leave shouldn't be in those kinds of jobs, and no government program can fix that.
Maybe I don't have the perfect solution in my pocket, but IMO the right answer can't be that employees lie about (or conceal) their intentions, and employers equally are forced to find plausible reasons not to hire women (or to fire them) just to stay afloat.
I have been asked on two separate occasions by two different bosses making a decision about hiring me on a non-temporary basis about my plans regarding children. I was 18 and 20, and am a woman. No way was I going to say anything other than "I hate kids" regardless of the truth. I don't want an employer making decisions based on my ability to carry children until the day comes that I decide I want a child.
Though I'm happy that no one as disrespectful of their employees and immature as the OP is going to hire me.
I think this is a pretty good solution to balance the fact that it's women that need to carry the child - now companies have less of an incentive to penalize them for that.
Interesting to hear how things are in other parts of the world, though.
EDIT: If you're downvoting, by the way, please leave a comment about why. I don't really care too much about the karma, but I'd love to hear why people disagree (and for the record, this comment is at -1 at the time I edit).
1. Anti-discrimination laws still apply, even in at-will states in the USA, but all that means is that the employer has to state that they fired the employee for ANYTHING ELSE, even if it's actually for a discriminatory reason.
2. Being fired without cause means gives greater opportunity for employers to abuse their employees - and, considering the general principles of game theory, it WILL happen.
3. Notice vs. cause can be separate things, but many people nowadays don't have the ability to survive longer than a couple of weeks to a few months without a job, and being fired without any notice can literally ruin someone's life.
Again, this is only a personal view - I'm no economist, and I don't pretend to have all the answers. So, please take this with several grains of salt :)
If you don't have a good reason for firing someone, why should you fire them?
I do agree that it will shift more power to the employees and it might help them in certain situations. But if you make it more difficult to fire a person, a business takes on more risk and loses more money when they hire someone who isn't good. Businesses will become less willing to take on new employees.
I don't find that a valid concern. If you don't have a cushion of at least 3 months (better, 6 months, ideally a year), then you're taking a big risk. You're living above or too close to your means.
Sure, there are exceptions. Not everyone is in complete control of their situation. But I've found that most people could be, if they really wanted to be. Instead they spend money on unnecessary stuff (often including families at or below the poverty line), or feel the need to "keep up with the Joneses". And sure, there's a whole psychology behind all this that makes it understandable, but the bottom line is that you're taking a huge risk with your financial health by behaving this way, and there will be strong consequences if you lose your job.
I'm absolutely not in favor of stronger protections. I want to be able to -- by default -- quit on the spot. I've never done it, and hope I never have to, but I want the option, as the default. If a company wants to fire me for reasons relating to my competency, then bad on me. If I'm not creating enough value for the company, because they want or need to go in a different business direction, then I don't want to be part of that organization, fulfilling a useless role. (And also bad on me for not getting myself into a position where I'm creating enough value.) If a company wants to fire me for a political or discriminatory reason, then I really don't want to work for them anyway. Life's too short for that crap. (Not saying that we shouldn't have protected classes and try to police discrimination, though.)
Admittedly, I'm at the "high end" as far as the workforce goes, as I'm sure many others here on HN are. My skills are in high demand, I'm good at what I do, and I'm able to live happily well below my means. So it's likely true that I don't "know how the other half lives". And frankly, I don't want first-hand experience. I want to keep my skills sharp and make myself valuable whenever and wherever I can. Maybe someday I'll find myself in a bad situation, but I have to believe that I'll have the skills and work ethic to keep myself on my feet.
I hope you don't find yourself in a bad spot. I made mistakes and now I can't quit my job - it'll be a learned lesson, I hope :)
Now, you might say "the company that fires all the blond haired people will eventually die at the hands of a company that gains an advantage by accepting blond haired people." True, but it's a slow bleed, and that certainly doesn't help the blond haired people who were arbitrarily fired.
In case you're skeptical, all this and more can be observed in the case of US black people up until the civil rights era.
To be honest I find the idea of paternalist employers rather revolting.
In my mind, it's a matter of inertia - if "protected" is default, then if an employer wishes to have the ability to fire anyone at will, they need to offer concessions - whether it be a higher salary, or the ability to quit at will, or whatever.
However, if "not protected" is the default case, then it becomes far more difficult for an employee to obtain such protection, as it's not beneficial to the employer. And as such, barring anyone who can negotiate their own contract (the minority, generally), most people will remain unprotected. And I believe that to be a problem, for reasons I mentioned elsewhere in this comment thread.
Not even remotely the same.
Because those two, worker and employer do not even remotely share the same power...
The employee just has to show up and do a barely acceptable job to get a steady pay.
Capitalism is about free trade and voluntary exchange (of whatever); "right to profit" and "right to salary" sound both horrible and rather anti-capitalistic.
PS A genuine thank you for engaging in discussion as opposed to hit and run downvoting
If I'm walking into work every day wondering if my door badge is going to work that day (one of the psychologically damaging aspects, IMO, of door badges -- I've had co-workers comment "well, I've still got a job" as they walk into the office) based on the capriciousness of a boss (some of whom are very capricious), well, I'm not going to be focusing particularly on the long-term elements of my position. In fact, I'm going to be spending a fair bit of time looking at alternatives and networking.
In ecology, the growth you get in an environment that's continuously disturbed and disrupted is best described as "weedy". There may be vegetation (and even some animal life), it's not going to be particularly productive. What you're getting is lifeforms that are selected for survival capacity, not, say, wood or food production, or even necessarily stability.
Nial Fergusson, though frequently not the best guide, does point this out in his Ascent of Money, noting that one of the requirements for successful and productive economic activity is stability. This applies equally to firms and individuals. Many of the structures we've adopted (debt, savings, finance, subsidized mortgages, various "golden handcuffs") exist either to buffer change or incentivise stability.
Kicking (or threatening to kick out) the legs from under someone isn't that.
Unfortunately, there's also been a lot of cargo-culting built around this: people in the U.S. who bought houses to ensure personal financial stability .... because buying houses is what financially stable do. Unfortunately, that's confounding cause and effect. You buy a house when you've got an assurance of lifetime (or at least long-term) employment, in part to help cement you with that employer. Similarly, establishing large lines of credit (or revolving debt): useful when you've got a reliable, if perhaps fluctuating, income stream to meet those debts.
Anti-discrimination measures, seniority rules, tenure, unions, labor review boards, and the like, all seek to change the power balance of the employer/employee relationship. Which, for any employer with n>1 employees, is greatly skewed in the employer's favor. While this may make for an economic climate which doesn't expand as quickly, it may also make for one that's more stable in a downside movement. Looking at economic growth between the US and established (e.g.: not modernizing, BRIC nations) economies, particularly in Europe and Japan, might be instructive (I haven't done the analysis). However northern Europe (particularly Scandinavian countries) have done quite well over the past 20 years or more.
If your landscape is rapidly shifting and/or doesn't sustain the level of existence you're trying to establish, you're going to want to move elsewhere (physically or figuratively), reduce your needs, or strengthen your foundations.
As to Mr. Andor's statements concerning his employment growth plans and policies:
1. He could move his business to a more hospitable environment.
2. He could find himself competing (successfully or otherwise) with those having different policies. This is "letting the market sort it out".
3. He could petition his government for changes in law and/or practice that better suit his business goals.
I'm not sympathetic to the arguments he provides, and suspect that he'll find that he's greatly limiting his enterprise's growth prospects by foregoing any possible payroll expansion.
Mark Twain: Someone holding a cat by the tail learns something he can learn in no other way.
BTW, I say this from the perspective of having lived on both sides of that equation. I've even done things like not taking home a paycheck during bad times in order to make payroll and keep people employed. Business isn't black-and-white and it is usually far harder than it looks from the outside.
Even if he disagrees then, so what?
Company owners/directors vs employees is a 1:x ratio, where x can get to 100,000 and more.
The law should protect the general population (employees) more than the few directors.
And if you are worried about other companies having an unfair advantage make this mandatory in all states. And penalty-tax international goods imported from countries without something similar.
Else, you are competing with the lower common denominator, ie. with what people are willing to do in a poverty stricken country somewhere on the world, where even kids are allowed to be put to work, etc.
Which is unfair to both you and to them (because it makes it possible to perpetuate their relative misery as a "strategic advantage").
The current state of the Spanish economy, particularly the crippling high youth employment is the primary case study for this situation.
Here's the problem. Bad employees tend not to leave of their own free will, in my experience the worse they are the more this is true. However, really good employees tend to move on every few years as they grow into new opportunities. What this means is that every time you replace a good employee you roll the dice that you'll get a bad one. There is now one position that is likely locked in place with bad employee. Over time this leads to a lot of bad employees, which in turn lowers your retention rate of good employees.
Now there is a standard tactic to fight this (and this same tactic would work in your senario as well). Make the bad employee extremely uncomfortable. Within the rules of the system do everything you can to make work suck. This does work reasonably well. The problem? Terrible employees are immune to this. So if this tactic is abused you end up with only terrible employees.
So in short, without the ability to fire people easily you tend to go on a downward spiral of increasingly bad-mediocre employees.
http://en.wikipedia.org/wiki/Constructive_dismissal
The overall problem is that in the end it becomes a game between bad employees and the management see how can play the rules against the other the best, which is a phenomenal waste of time and energy.
In the UK it can be up to 11months and 3 weeks before the main employment laws kick in.
I think the comment is too political and lacks content. The Guidelines say: "Please avoid introducing classic flamewar topics unless you have something genuinely new to say about them." Although I don't wish to be a jerk, I also don't think the comment meets this criteria. So I downvoted it.
In reading comments, I try to upvote those written by people with special knowledge or insight, usually gleaned from particular experiences in the field or unusual reading / insight. I often downvote those that seem to lack such insight, or be random, or that don't have "something genuinely new to say," or that are too overtly political.
I'm not downvoting you because I disagree with you—I actually haven't given much thought to the issue of at-will employment versus government-mandated employment and so don't really have an opinion—but because of the lack of content in the comment.
You're relying on your employer for an income, this is true, and thus being fired in a way you don't feel is justified seems unfair. Naturally.
Your employer is relying on you to do a job and has invested (lets say hypothetically) in your training, and thus you leaving arbitrarily (say you got a better job) seems unfair to them.
One solution to this would be employment contracts that require you to stay at the job and the job to remain open to you, for some period of time under certain conditions.
Would you accept giving up the right to leave arbitrarily in exchange for the employer giving up the right to fire you arbitrarily?
Of course, if both parties agree, it's a wash.
We also have paternal vacations, but much shorter - 20 weeks to share between father and mother. And employers still complain that it's too much.
People that oppose 'right to work' and 'at-will' employment tend to not understand this until you put them in the position of the party that is providing the compensation. Once they are forced to pay for a service they do not want/need/like they are less likely to support laws like the ones in the article.
"At will" means there's no contractual agreement and an employee can be terminated for documented performance issues or for business reasons (i.e. layoffs) without it being treated as a breach of contract.
In a contractual arrangement, for either party to walk away (even for business or performance reasons, unless stipulated) is a breach. In at-will employment, it's not a breach of contract. That's not the same thing as saying that people who are unjustly fired (e.g. pregnant women) have no recourse.
That said, it's usually not in a person's interest to pursue a wrongful termination lawsuit. It's much easier and less risky, in most cases, to get another job.
"At will" means there's no contractual agreement and an employee can be terminated for documented performance issues or for business reasons (i.e. layoffs) without it being treated as a breach of contract.
That's not true at all. You are misunderstanding contract law. An employer-employee relationship is a contractual relationship, even if not formally memoized in writing.
"At will" simply means that the length of the employment arrangement is not defined, and continues so long both parties agree it shall continue. If either party decides it should not continue, that party may end the arrangement (the employee by quitting, the employer by firing). An at-will employee can be fired for any reason, so long as it is not one of the prohibited discriminatory reasons (i.e., age, gender, etc.). There is no need for the employer to document the reasons for termination, though many due as a matter of course (usually, to defend against discrimination lawsuits).
That said, it's usually not in a person's interest to pursue a wrongful termination lawsuit. It's much easier and less risky, in most cases, to get another job.
LOL. If a person is fired for discriminatory reasons, it is definitely worth the effort to sue. In addition to salary for the period of reasonable unemployment, they are also entitled to punitive damages (usually 3x actual damages).
It could be that the firm was more worried about image than losing the lawsuit, but my point is that it's not that simple. You may not be able to get wrongful termination, but there are other claims. Example: you don't get along with your boss and (instead of getting fired) you try to transfer to another group. If this works, great. If it doesn't, because said boss said something negative about you to the manager of the group you're trying to transfer into, then he interfered with your relationships elsewhere in the company. Get him for harassment, IIED, et cetera.
LOL. If a person is fired for discriminatory reasons, it is definitely worth the effort to sue.
I said "usually", and I should have qualified that with "for most HN readers". If you're 55 and on the cusp of retirement, or if you're a member of a minority in an obvious discrimination case, it makes sense to sue. If you're a 25-year-old white guy in finance or technology, it's usually not worth it to risk your reputation, because lawsuits go into the public record.
Guess what? People are messy. But more importantly, people are valuable.
The author can whine all he likes. But really, try getting something done without them. Oh, wait, he says he's not going to even try... why are we reading this?
The author is describing a lot of negative legal aspects in his country that make running a successful business nigh impossible.
The reason that the article irked me:
Imagine this combination: brilliant, an MSc in CompSci, being over 50, female, not white, and an immigrant.
I tried to get her hired for the IT department where I worked. Instead she was cheated out of her pay and fired before the standard employee trial period ended. Standard practice for the place. (900 employees in four years, avg occupancy of 50 workers, anyone mid-level and up is white only, and as soon as a project was over almost everybody is fired, continuity of work is not the issue).
I've heard all the same excuses before in a much friendlier business environment. All in an attempt to treat people like they are not human beings. I know nothing about the author and I'm not disputing the realities of business in Hungary. But damn I want to shoot the message.
And a swath of downvotes in an attempt to do so is worth that...
Startup hires tend to be somewhat self-selecting, as the jobs tend to draw young males without families. The risk of the job makes it more appealing to those types, but the field is generally overrun by men, which is a topic that seems to come up every few months as well.
What that means is that the eco-system is better for lean startups. You don't have to have the 'buffer' budget over actual costs that corporations do. Large companies typically offer paid vacation, matching 401k, disability leave, maternity leave and all that jazz.
If you're working on a lean startup right now, ask yourself what would happen if your lead developer disappeared for three months.
This is one of the real disadvantages we face as a nation because, in large part, the people we outsource labor to don't have these protections.
I was comparing the average lean startup to the average large corporation. Neither made-up example was his company.
The point of the article is that employees are expensive. Certain types of employees are potentially more expensive than others. He wants to avoid hiring the low-risk people, but isn't allowed to. The self-selection of startups is... y'know what? I'm just repeating what I said originally.
The hardships encountered in Hungary are the same sorts of hardships that large companies have to put up with, to varying degree. That was the basis for my comparison.
If you don't get it, sorry. I honestly don't know how you read the article and read my post and don't know how they relate.
That blogpost made me kind of like a celeb, a bloghero or something. Fact is, that single blogpost generated half a million pageviews, 91141 Facebook likes in a matter of days. It was covered on national television, I was "the blogger of the week" at the biggest local blog provider (blog.hu), a whole bunch of responses were written by big names in the trade.
Newmedia analysts were trying to figure out what made it such a big meme, out of the blue, from totally nothing, without any mainstream media promotion. People shared it like hell, on Facebook. Likes were rising by hunderds, by the second. Like this: 30145, F5, 30359 ...
You and your employer come to an ex ante mutually beneficial agreement. A secure and effective government will enforce such a contract, unless it represents an egregious abuse by one of the parties. A responsible government will formulate a wise definition of egregious abuse.
Once you start to enumerate all unenforceable contracts, you will come to understand how far we are from this situation. And when you look at how insecure, ineffective, and irresponsible governments are, you'll see why we may never get there.
Well, at least that's how things were about 10 years ago when I left - it could have changed a lot.
There was some economist who estimated that if a business in Russia pays EVERY tax it's supposed to by the law, it will pay way over 100% of the profits in taxes. So technically there is no business that is following the law 100%, giving the 'controlling organs' the power to ask for bribes. Could be an urban legend though, I don't have links.
Edit: The parent talks about general taxation, and my take is about the taxes a company has to pay for each employee on top of her salary. Still, I think, "white" and "grey" salaries is an interesting point.
She opened a bar and never, you know, registered as a business or kept books or did any of the other business things you'd need to do in the US to stay out of jail.
Her impression was tax receipts come mostly from the giant chaebol like LG and Samsung.
Sorry, I call BS. This figure is just made up.
What really looks bad how Hungary's laws make companies noncompetitive. E.g. higher employment taxes means people will work in other EU countries if there is possibility.
1. I can fire you, if I want to.
California has at-will employment, but you sure can't fire someone based on gender or age anywhere in the United States—and he opens with his desire to do just that.
2. If VAT goes down to at least 20%, better yet 15%.
Sales tax alone is not 20%+$.01 anywhere in the Bay Area, but there are a surprising number of added taxes here and there—Healthy San Francisco, for example, or the California state gasoline taxes—that can make the surcharges on consumer goods add up to that level.
3. If the state takes away "only" 30% of your money.
Federal income tax + California state income tax + FICA significantly exceeds that for most people in the technology industry in Silicon Valley.
4. If higher income is not exponentially punished.
The US certainly does have a progressive income tax scheme.
5. If the states punishes corruption instead of decent companies.
No-bid contracts, anyone? The US is hardly free of corruption.
He's asking for a place that doesn't exist. Moreover, it's a place I wouldn't want to live in; I don't want to live in a place where it's legal to discriminate against minorities, in particular.
i think his desire was to be able to fire people who don't do their job or dont do it well
It is a very grey area. Too much government regulation and how the hell can it be profitable to hire someone. Too little and individuals get borked if they get pregnant/sick/etc.
Personally I would sacrifice less pseudo stability for less regulation. I believe many problems start off with good intentions, especially when it comes to more regulation.
Car insurance isn't compulsory in all states (assuming you are from the US, but most require it). In NH you simple have to prove the ability to provide personal responsibility. If the roads were private, then it should be up to the owner of the road whether or not insurance is required.
More generally: Having children costs something, because it requires work input. Who pays for the children? The men, women, families, their employers, the state (=also people who don't have children)?
Possibly a necessary means to end (if you believe in this kind of logic) but hopefully not an end in and of itself.
(Already got enough minus points for pointing out gender issues and advocating free education so may as well dig myself even deeper :) )
I don't think you understand his position at all. Trying to fire someone in Europe is often compared to adopting a child, lawyers will take cases against former employers on commission because the probability of winning the case is extremely high. There is no comparison when it comes to US at-will employment, for eg. you have to be able to prove that the employee you fired for coming drunk to work was really drunk, that you gave him written warnings, flowed the formal procedure etc. To be fair tough, employers often use employment agencies that exploit loopholes but it only serves to increase the cost of labor. The only ones benefiting from these laws are the public sector and government owned company employees (ironically even government owned companies resort to exploiting loopholes because even they can't operate under the regulation). And these are probably much higher percentage of workforce than in the US.
And the corruption he is talking about is tax evasion and gray market, that's a huge part of the economy in these countries.
Also, I'm thinking the "progressive tax" in the US kicks in at a much higher nominal amount then Hungary, and that it's disproportionate to the cost of living difference.
5 months don't look as too much to me; this notwithstanding many businesses only hire young women if they sign a blank resignation letter (which of course is illegal too, but very difficult to prove). I agree it's a very complicated matter.
The best solution imho would be to have more state-subsidized childcare solutions (we have some, but much less than needed), which would make young mothers more productive for employers, but I understand that most free-market advocates wouldn't agree :)
PS Yes I expect to win the case, because my wife's former employer so patently broke the rules. But here in Italy justice is so slow (next month there will be the first hearing, 8 months after we sued) and compensations so little that very often employers get away with it. I decided to go to court more to defend a principle than for an economic reason.
With generous (eg like in France) benefits per child, or generous unemployment benefits for young mothers, I could agree with more flexibility. The problem is, benefits cost immediate money from the State while putting the burden on families and businesses only costs in the long run. Given our current debt, the choice is very limited...
I think the best thing countries in Europe could do is implement something like a negative income tax and kill all that regulation and special programs/taxes/bureaucracy but I haven't even heard anyone in Europe propose such a move.
I don't think that deregulation is always right, but it is when you have too much - and we do have too much regulation, too much discretionarily applied.
Eliminate paper currency and only have digital transactions, force the banks to disclose accounts and transaction information to remove gray economy and use NIT scheme instead of all the special programs. That way everyone get's the same safety net when they are unemployed or poorly paid and you can have unregulated at-will employment because employees aren't forced to negotiate for bare minimum.
P.S. 3 years maternity leave in Hungary looks really bad IMHO.
On the other hand, it looks really good for the children. This is worth paying for.
In much of the world people will complain to a government department if they are discriminated against, and expect the department to investigate impartially.
It is typically only in high-value cases (ie, C-level executives, sexual harassment cases where high levels of damages are expected etc) where people usually seek private representation.
(I'm from Australia, and this is the case here. In my state I'd use this procedure: http://www.eoc.sa.gov.au/eo-you/making-complaint)
Federal income tax + California state income tax + FICA significantly exceeds that for most people in the technology industry in Silicon Valley.
Does it add up to anywhere near the ~52% his graph says it is in Hungary? Or are we talking around 35% or so?
Edit: The EU is considering if measures should be taken; I hope they will, and fast.
P.S. I'm from Eastern European country and I see some similarities with Hungary.
Politics has more than one dimension, and we're not even sure which dimension is described by this left-right dychotomy.
Ok it's rare occasion that 4/6 would reproduce at the same time, but if the owner nice enough to hire mostly just graduated hairdressers, it starts to look possible.
Three-years maternity leave? That's unheard of in western Europe, most countries allow for less than a year (my wife got 6 months in the UK); men only recently started to enjoy some rights in that sense (in the UK it's two weeks).
He talks about a post-50 "protected age" where you can't fire people. That doesn't exist in the UK, where we have the opposite problem (firms firing people near pension age, and then hiring youngsters at 1/3rd of salary). I know in other countries laws are tighter (in Italy it's fairly hard to fire people, for example), but as people say over there, "Facta lex inventa fraus" (as soon as a law is written, a way around it will be found"): in countries with rigid laws, firms now hire almost exclusively on a temporary basis, i.e. they hire people as contractors for years or even decades, abusing the relationship.
The high taxes and pension contributions are also a factor in Italy and in France, but not elsewhere.
What this post is representative of, is the general douchebaggery of European "entrepreneurs"; they usually come from "old money" (banks are very conservative with their lending, favouring entrenched players) and bring a terrible mindset to the workplace, i.e. "screw the employees, they're just idiots anyway". This obviously doesn't motivate workers, keeping productivity low.
Some startups from Hungary with funding:
Yes, we'd need a lot more.I remember those guys!
9 months is the "baseline" maternity leave in Finland. My sister had a baby and ended up being away from work for almost two years. She just started working again this week, and the same company was legally obligated to take her back.
One of the favorite words around here is "pivot" and ponder how a company can pivot successfully with some of these considerations. Sometimes a pivot will completely change a product, business model, industry, etc and the company has to hire or layoff people accordingly.
It sucks by all measures (I've been on the wrong end of that), but ponder how much more difficult that gets when some of your staff is untouchable.
Even if it's not a problem, it changes your mindset and gives you yet another thing to worry about.
Actually its not, employers always have the whip hand - what they are complaining abotu is that its harder to act in grossly bad ways in the UK.
As for maternity leave, the same issue exists in the USA, to the extent that any firing of an employee has to be non-discriminatory. As for health-care : That's a very expensive nightmare in the USA, and it would be far more efficient IMHO for it to be wrapped into a % tax levy, rather than flat monthly rates (but that's a rather political statement in the US).
I also cheer for the lofty let's-share-the-social-burden ideals that people present in this thread. But I fear these folks are just blissfully oblivious of how their money is redistributed and where it really ends.
In Romania it's about the same: the taxation for an employees is high and so is social security (pregnancy leave, difficulty firing, etc). But people don't complain as much because tax evasion is really high.
Of course, this is really annoying for me because if your customer is in the US they will not pay you behind the counter, they will do a wire payment or such, which goes straight into accounting and is taxed.
In this regard, tax evasion becomes unfair competition.
Some companies are preferring contractual work and abusing it, by putting clauses in the contract that employees cannot quit for the next 5 years. This works in the cases were employees need to travel a lot (for example) and in the contract it is stipulated that if you quit, you have to pay the costs of accommodations, food and "training" provided during the contract, which is not feasible for most people.
This IMHO, is equivalent to modern slavery. If you're not able to quit, you cannot complain, you cannot negotiate a higher salary and you are at your employer's mercy.
(For the record I am for at-will quitting and firing)
But, as an employer, I feel I am clearly at a disadvantage.
It's easy to put clauses in a contract, but it doesn't actually mean they could be enforced in a court of law, even in one as bad as Romania's.
Having seen the restrictions the local Labour Department (ITM) puts in place, including the kind of stuff you may add to a contract makes me doubt what you say is more than a scam. I have never seen such a contract nor do I know somebody in IT working under such conditions.
Even a non-compete clause is something that I cannot add to a contract because it's super-expensive. According to the law if I want a non-compete on an employee, I have to pay him at least 50% of his salary for the duration of the non-compete.
Also, I know of at least one instance in which the owner of a company asked his employees to sign their resignations, without a date added. He can fire anyone when he feels like it.
IT is one of the very few privileged classes in Romania. People working in IT are blessed. It does happen a lot less in this field and usually the fraud committed is more subtle, but it does happen. I was talking about my godson btw, he's not working in IT, but he is a knowledge worker and he has 3 years of his contract left.Also, asking for a return of "subsidies" is completely legal.
IMHO, non-competes should be banned completely. And I'm glad that you are unable to add it to your contracts ;-)About firing, it does seems fair to me: an employee can just quit at any time with no reason so a company should also be able to fire at any time.
They way I see it, asking for a return of "subsidies" should be regulated some more. But not outright banned since I can clearly see some situations where it would make sense.
I am able to add non-compete to a contract, it's just not worth it because the ex-employee will still be getting at least half a salary each month. I don't see why they should be banned.
In California non-competes are not valid, except for equity stakeholders. Silicon Valley is in California and clearly the lack of this privilege hasn't done much harm to businesses - quite the contrary, if the correlation with their success in the software industry says anything about it (the same argument could be made pro software patents, however software patents have only began to be seriously accepted / enforced recently - and I feel like Silicon Valley will see a decline because of it).
As a boss, you have more influence over your employees' daily experience than possibly anything else in their life. The reverse just isn't true.
So, I don't see how much my position as an employer impacts my employee's daily experience. They are free to do what they please, they just have to perform some work on a laptop for 8 hours a day.
The disadvantages are many for a company, starting with the fact that you have to play by the rules that are enforced by various entities that usually can't wait to fine you.
Firing an employee is rather complicated [1] and you are not allowed to do time-limited contracts much. So, once you hire somebody you do it "for life".
In a small company I would say any employee influences about as much my life as I influence theirs. I had a guy quit on me out of the blue this year (got another offer) and it was a bit of a shock for my business -- I'm not certain there is anything I could do that would impact an employee that much except suddenly firing him, which is restricted as I've just said.
1. Actually they changed the law recently, it might have become less complicated, not sure...
For those interested, this is the reality in my country, Slovenia, which borders Hungary (I may have botched some numbers regarding taxation, but the principle behind calculations stands):
1. Out of every monthly salary you pay: income tax, state/public pension fund, health insurance and also a small tax (<1%) called parental security.
2. A woman or a man may take up to 12 months of parental leave, which is fully paid by the state. The government uses money from 'parental security' tax to pay for this privilege. It works, because at any given moment there are many,many more employees not on parental leave than those on parental leave.
3. A woman is entitled to sick leave during pregnancy if her doctor makes such decision. So it may well be that she is absent for two years from her job. And it is also true that many women abused this privilege simply by convincing their doctors that they 'cannot perform on the job while pregnant'. A few years ago there's was a sort of clampdown to this practice by tightening the control on the doctors' decisions. So it's not that pervasive anymore.
4. A woman is also entitled to reduced workday (only 4 hours instead of 8) while her child is under 6. Her salary is of course halved, but state covers her pension fund as if she worked 8 hours. Many women don't decide to use this option, simply because a halved salary puts a lot of strain to majority of families' incomes.
5. Regarding firing workers: similarly to Hungary it's very difficult to fire someone and almost impossible to fire pregnant women or old people. Therefore, majority of people under 35 don't have regular contracts, but they work via independent contracts or the so-called self-employment companies (you establish a company in which you are a sole employee and then go work to another company which pays you via your small company). Needless to say, job security is practically non-existant if you aren't on regular contract.
6. Progressive income tax is also here, however it's not as brutal as in Hungary. Lower salaries (<1k euros) are actually not taxed that much. The problem is only that the highest tax bracket (41%) comes already at 2k euros and that hits middle class the most. We, skilled professionals, are usually complaining the most about this fact. There are discussions to change this taxation in order to stem the brain-drain. It's also important to know that progressive taxation is applied on 'past-the-post' principle: e.g. you are taxed 41% only for your income that goes over a certain amount. This means that if your salary is 2k euros, you'll be taxed 41% only on income past 1.5k euros, that is 500 euros will be taxed 41%, 1.5k euros 27%.
7. Grey economy/tax evasion is certainly a problem, however the tax bureau is becoming more and more powerful and it's connected with banks. It's actually not that easy to cheat anymore. That goes for majority of people/businesses, richest top 5% still game the system by moving the money to Cyprus/Luxemburg shell companies and so on, but this can't really be helped unless it's solved on EU level.
Ok, I'll stop now :-). If you have any further questions, then do ask.
Federal 25%(over 34k), Medicare 15.3% (below ~120k cutoff), Medicare 2.9%, Virginia 5.75% (over 17k /year). Now many people get tax breaks for various things but 50% income tax rate is fairly common for the upper middle class without much in the way of a safety net or public heath care.
I'd also push back on "not much in the way of a safety net". I'd like universal single-payer health care, but in the meantime it's worth remembering (a) once you hit retirement age, you very much do get public health care, and (b) retirement age is when you're most likely to incur medical expenses.
The problem is that salaries in DC aren't double Austin.. they're more like 1.3-1.5x.
Also, once you're about the 50k threshold for income, some of those deductions - like for student loans - start decreasing and disappear.
The only deductions I mentioned --- mortgage interest and state taxes --- don't vanish at $50k.
Higher taxes because I choose to pay other people for housing for the rest of my life? Huh?
You are free to disagree at length with both of those beliefs and I won't fault you for doing so, except that if the best argument you can muster is "no fair, I just want to rent" I may roll my eyes.
But the thing I really wanted to point out is, there are 104905480 things we can debate on HN where a change of perspective might be productive. This isn't one of them; the mortgage interest tax deduction is a psychological pillar of the middle class of the US and eliminating it would be painfully disruptive to huge numbers of voters.
Narcotics will be decriminalized nationwide before we lose deductible mortgage interest, is my prediction. People have strong feelings about drugs, too, but the decision to legalize them or not doesn't change whether they can still afford the cable bill.
This is fundamentally an issue of the tax code, once again, favoring those who are well off while disadvantaging those who are not.
If that doesn't concern you, then so be it.
Hopefully the mortgage interest deduction will go the way of ethanol subsidies.
[1] https://en.wikipedia.org/wiki/Mortgage_Interest_Relief_At_So...
I never knew someone in the US that had to get cash to the doctor on the side or bring their own toilet paper and food to the hospital.
I had a friend who broke his arm. The emergency room doctor wouldn't touch him until the family provided some cash.
If you have to provide extra bedding, food and toiletries for a hospital stay on your own - those costs aren't reflected in the taxes that one pays for health care.
This has nothing to do with debating the merits about either system, I'm purely talking about trying to accurately compare the costs.
The system you describe is obviously corrupt, and I sympathize with the frustration, but I might prefer a system where I had to spiff doctors a couple bills to get an arm set over a system where I could be both insured and bankrupted by minor surgery that happened to snag a loophole in my policy. That's the private market insurance system we have in the US.
I lived in the US most of my life. The health care system there is pretty messed up - in my opinion. But when I moved to Hungary I realized I'd been quite naive about how things are here.
I assumed it was a rather cut and dry fact that health care would be better here - and it isn't as simple as I had assumed.
As tptacek pointed out you are ignoring that the state tax is federally deductible and that the income tax rate at the 25% bracket is the marginal rate.
At that income level (around 100k/yr), the tax federal taxes reported to you on your last pay stub of the year should be around 28%, when you count FICA (6.2%) and Medicare (1.45%). Add to that whatever your state income tax is (most states have an income tax). As an example, I have to pay 4.63% to the state of Colorado. I think most states that impose an income tax are within a few percent of that. Then add the hidden employer side of payroll tax (another 6.2%), and you end up with a figure that is close to 40% of income.
Minimum standard deduction and a single personal exemption will remove a few percent from this figure at filing time, and you can delay tax payment through 401(k) contribution, but it is still a very heavy tax rate. It is just well hidden from the average income earner by putting the taxes into a number of buckets.
20% sounds low to me too (makes me wonder whether he missed FICA), but add all them together and you're still not giving half your money away.