Ichino argues that the institutions surrounding the transfer of labor are far too restrictive to private companies and unrealistic that they are preventing Italian-based companies from becoming globally competitive. In particular, Ichino takes a shot at a law that protects workers from being fired for except for the most exceptional of offenses perpetrated by the worker. This law discourages private companies from hiring labor in times of question, since the hiring of labor is not an easily reversible cost. In addition, it prevents downsizing by companies, since they are unable to unload labor costs. Another economic downside that I see in this is a reduction of the incentive structure. If someone's job is essentially guaranteed, they have no incentive to improve their skills, job performance, or to work harder.
It seems that in recent, Italian labor laws have changed to become less restrictive, but while the law protecting workers from being fired remains relevant, Italy will still lag behind other nations in terms of business environment. It is disturbing that so many death threats have been made against Ichino and his peers, and may signal how difficult it will be, politically, to change that law and other so-called 'workers protection' laws.
1 comment:
These strict laws and regulations are preventing Italy from growth. Private firms have little control over their labor and high job security is decreasing the efficiency of these firms. Companies are being held back from evolving into competitive and well-functioning organizations. It is unfortunate that Ichino doesn't have more supportive followers who see the benefits of competition within the job market.
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