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(which I don't necessarily subscribe to) is that:

  • Difficulties in the firing process make companies hesitant to hire and bloats payrolls with unproductive employees.
  • High payroll taxes make employees much more expensive than their take-home pay indicates.
  • High levels of holiday and vacation time, along with shorter work weeks in many countries, makes workers are less productive and thus overhead higher.
  • More and higher bureaucratic obstacles to business creation, plant expansion, and other actions reduces new activity.
  • Generally high marginal taxes reduce the incentive to work.

Of course, they never seem to mention good things like:

  • National health care systems that keep workers healthy and relieve employers of having to administer health care benefits.
  • Relatively good primary and secondary school systems means that workers can be productive with only a secondary education.

The Economist frequently cites the Netherlands as a model - strong safety net plus workplace flexibility results in the low unemployment in that country.  I doubt the formula is that simple, nor the reality on the ground uniformly wonderful.

(Note: This all from vague memories of many articles, so I could be misrepresenting their line.)

by Tom DC in VA on Tue Jun 21st, 2005 at 05:11:36 PM EST

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