Sweden's Job-Security Councils Make Layoffs Easier

https://www.theatlantic.com/business/archive/2017/10/how-to-lay-people-off/543948/?single_page=true

by imartin2k • 9 years ago

55 59 9 years ago

This is what I always believed unemployment SHOULD BE in America. The amount from unemployment is painfully low for most people who need it, but having been on unemployment a few times, beyond the check, there's very little support.

geofft• 9 years ago

Social protections for the unemployed allow you to disentangle "Should I ruin this person's life" and "Is this person contributing to my business". I understand the reasons why those two got entangled historically, but I've always thought anyone who's really invested in a society with both laissez-faire capitalism and a claim to moral decency should support an extremely generous social safety net.

walshemj2• 9 years ago

For some people SS in the USA is more generous when I worked for a company that went bust benefits £56 pounds a week ran out after 18 weeks.

SOLAR_FIELDS• 9 years ago

My anecdotal experience, from having lived in Sweden and worked with Swedes for some time now, is that actually firing someone in Sweden for performance reasons is quite difficult for both cultural reasons and worker protections. So this might make the process of widespread company layoffs easier on the employee, but it's not something that makes the workforce significantly more mobile, at least from an outsider's perspective.

rnd33• 9 years ago

Definitely agree, firing someone for performance reasons is so rare that unless the person is generally disliked, and generally thought to be really bad at his/her job morale will take a huge hit.

emj• 9 years ago

This is more or less true, big layoffs are pretty easy in Sweden, but some organizations can easily kick out people for performance issues, even though it's supposed to be hard.

surfmike2• 9 years ago

Based on experience from Norwegian colleagues:

Yes it is more difficult than in say the US but not that hard. You just must document over a period of months that the employee is underperforming and not improving; you can’t just fire them with no notice or warning. Most big corporations in the US work this way anyway as well.

pyronik2• 9 years ago

Yeah and its a complete pain in the ass. It's funny these people can't do their jobs but they are masters of using HR departments to shield them from their own incompetence.

alkonaut2• 9 years ago

You just must document over a period of months that the employee is underperforming and not improving

And of course the documentation must include signs that they have been given any required to improve etc.

Depending on how bad it is, the deal settled with the employer will vary. If there is video of an employee sleeping on the job at the factory on severeal occasions, they will probably be let go without compensation. If the employee just complains that a worker is only half as fast as the guy next to him, there is no way the employer can let the guy go without compensation.

alkonaut2• 9 years ago

but it's not something that makes the workforce significantly more mobile,

Right. The rules for layoffs are more or less that "performance" is not a valid grounds for firing someone. The reasoning here is that the employees performance is the responsibility of the employer, who has to provide management, training etc. An employee have to basically mismanage their job to the point where it's illegal to be possible to fire.

Now, you can always fire Joe because he's a slow worker- but the union will protest. He'll likely be fired anyway, but it'll cost the employer (Joe will get a years salary and leave). The rules are basically "First in first out" - and employers have to buy each exception. The same would apply when closing a whole branch/factory for example. The employer likely knows which 20% of staff they would like to keep around, but they will have to wrestle with the union for every exception to the order. It's usually well worth the money for employers to keep the good employees and let the worst go. In Sweden this is effectively the only way you can make the "stack ranking": you move a bunch of workers to a special branch or factory. Then shut down that product/factory/office. Then pay those workers a years salary or two to not come back.

So the solution discussed in the article is meant to make it easier for companies to change strategies e.g. by laying off entire branches. Such as banks closing offices now that most people bank online, or Ericsson shutting down all their factcories that made landline phone switches. It's not about the ease of firing individual employees.

A system for making labor laws less strict to make it easier to lay off individual employees is popularly called "Flexicurity" after the model used in Denmark. Basically, the worker collective would accept liberalization of the ordering rules in exchange for public safety nets being so good that being laid off doesn't really matter (Say e.g. 80 or 90% pay in unemployment benefits). This type of model has been proposed for Sweden, but it has never really been close to being implemented yet.

gaius2• 9 years ago

This is how it is in France, off the top of my head, unemployment is 85% of salary for up to 2 years. I know a few people who just chillaxed after the dot-com bust in '01 waiting for the economy to pick back up again.

jordanb• 9 years ago

In Sweden this is effectively the only way you can make the "stack ranking": you move a bunch of workers to a special branch or factory.

Stack-ranking has been horrible every place it's been tried so I'm not really sure how this is a bad thing.

From what I've seen in my time in corporate America, poor performers are often kept around regardless of if a union is involved or not for a variety of reasons:

* firing someone for performance is a hassle even without any union representation because HR requires careful documentation,

* for the manager, firing an employee for performance means admitting that you made a mistake on hiring,

* firing the person may put the budget for their salary at risk, and

* if layoffs were to happen in the near future the manager will need the person as a sacrificial lamb to protect the rest of the team (this behavior is greatly enhanced by stack ranking, to the point where people are hired specifically so they can later be marked as non-performers and let go in the next culling).

donw• 9 years ago

In Sweden this is effectively the only way you can make the "stack ranking": you move a bunch of workers to a special branch or factory.

Stack ranking is one of the worst ideas to ever hit the corporate world, and is, in general, a sign that I probably don't want to work (as an employee, at any rate) for that organization.

Collaboration is so fundamental to software development, or any creative endeavor.

Stack ranking, however, encourages heavy amounts of back-stabbing political competition.

Even if the team performs well ahead of expectations, the bottom 20% of the team will still face consequences for the "underperformance".

This is the same sort of bullshit that killed Sears.

WalterBright7• 9 years ago

The harder it is to fire someone, the more reluctant companies will be to hire people, and the more choosy they'll be.

expertentipp3• 9 years ago

Looking at the absurd and unpenetrable job search market we might be around the peak of this phenomenon currently.

eesmith10• 9 years ago

You make it sound like "more choosy" is a bad thing. Aren't all the big technology companies choosy about who they'll hire?

The numbers given the essay suggest that Sweden's employment rate is not unusually low, so is your comment really a meaningful basis for making a policy decision?

When it's easy to fire people, it's also easy to fire people for personally motivated reasons, rather than reasons which are good for the company.

For example, the boss might want to fire someone to bring in a family member. Nepotism isn't illegal. But the union contract helps prevent these sorts of (non-business related) firings.

People tend to work better when they aren't worried about being fired for reasons that have little or nothing to do with their job.

forapurpose2• 9 years ago

The harder it is to fire someone, the more reluctant companies will be to hire people, and the more choosy they'll be.

That's true in theory, and I agree that it is a factor, but there also are many other factors involved in hiring/firing decisions.

Also, it's not much benefit to a worker to be hired and fired with regularity because it's easy; people are not commodities, to be traded, moved or bought & sold like dollars or widgets. Finally, workers need to be able to protect themselves from unscrupulous employers. So the question is, how do we find a balance?

As far as public interest goes, I'm not interested in making corporate executives' jobs easier or in making corporations more profitable; I'm interested in people having good jobs and being productive. Corporate profit, job market liquidity, etc., aren't bad, and profitable corporations are necessary for good and productive jobs, but they are a means and not an end.

flurdy• 9 years ago

True, except when there is a virtual near 0% unemployment in cities, then even when it is hard to let people go they still are pretty desperate for candidates.

(Speaking from experience from tech industry in Oslo, before I moved on)

Also why depending a lot on more on easier to let go contractors are prevalent all over Scandinavia.

runj__• 9 years ago

Normally people are hired with a "provanställning" for the first three/six months, basically an at-will contract where you can fire the person for basically any reason (it's very pro-employer). In my experience you can tell if the person is going to be fired because of low performance in that time span. So "companies don't hire because it's hard to fire" doesn't really ring true for Sweden.

People (in tech) don't hang around the same company for too long either, even when someone who doesn't know anything gets a cozy job some company is going pay them better for another cozy job.

expertentipp3• 9 years ago

Funny, Swedish outsourcing centers in CE Europe don't have councils. They just pay half of Swedish salary, demand obedience, and fire at will. Job counseling those laid off? No such thing. Someone has to work for and pay for their luxurious conditions back home. You're welcome, Swedes - hope you'll choke on your redundancy packages.

walshemj2• 9 years ago

Yes a lot of European companies that behave well at home behave badly overseas I know of one that artificially bankrupted a uk subsidiary to avoid paying the statutory redundancy payments.

They called every one to a meeting said where bankrupt you don't have a job and there's a pile of RB2 forms over there. Th Rb2 form is to claim the much reduced redundancy payment from the state, when the parent company could have paid the statutory redundancy out of petty cash

TheAdamAndChe4• 9 years ago

This is why worker protection laws are so important. All big companies will behave sociopathically in order to maximize profits. It's only through government regulation that such anti-worker behavior can be limited and controlled.

devdad2• 9 years ago

I agree with the sentiment - but it's not the workers nor the union that's responsible for those shitty conditions. Also, when companies in Sweden hire workers from other countries at lower pay, the unions will protest. And try to raise the newly hired non-Swede's wage to the Swedish standard.

expertentipp3• 9 years ago

The same people, the same companies treat employees as disposable assets if they only smell they can do it without consequences... and they do it - on the same continent, only couple hundreds kilometers away.

taway_1212• 9 years ago

Well, that’s the reason a large Scandinavian company I work for is moving a lot of its massive IT to Central Europe. As for firing at will, it’s not neccessarily easy or cheap to fire someone in CE as well.

jernfrost3• 9 years ago

You seem to misunderstand. These things don't exist in Nordic countries because companies decided to be nice. They exist because large powerful unions and cooperative governments pushed them to it.

You can't sit back and wait for companies to behave. You got to push for political change in your country. Strong unions combined with laws protecting them is one way of making sure companies play by the rules.

I can tell the same story about foreign workers in Norway. We got lots of polish and other eastern European workers to the Norwegian construction industry.

These workers were treated much worse than Norwegian workers because they 1) didn't know their rights 2) were not union members. After concerted efforts by the Norwegian unions to inform eastern European workers, create information material in polish etc, then conditions started improving a lot.

It is not an accident that Nordic workplaces are quite nice and the unionization rate is close to 80%.

Sweden's Job-Security Councils Make Layoffs Easier

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