Differing Perspectives on Hiring and Firing of Workers

Unemployment in the West

In recent times, there have been mass layoffs in the Western world because of the ongoing global economic crisis. This has led to widespread unemployment with levels of 25% in Europe (among the youth aged between 20-25) and 12% in the rest of the continent.

This kind of firing workers in times of economic crises is common in the western world where during the Great Depression of the 1930s, the unemployment rate was close to 50%. However, once the economy recovered after the Second World War, hiring resumed and led to a sustained economic boom that lasted decades.

The point here is that the approach towards hiring and firing workers in the west is dictated purely by economic considerations. Of course, the fact that there is a social security net in the form of unemployment benefits means that being out of a job does not necessarily lead to immediate poverty though in the longer run, being unemployed for a few years can certainly lead to that.

The fact that most western economic recessions last a few years with even depressions lasting no more than five to seven years means that the practice of hiring and firing workers according to capitalistic principles is accepted as a fact of life by both the employers and the employees.

Eastern Attitudes Towards Unemployment

However, the situation in the East (especially in China and India) is different as the unemployed do not get any benefits from the government and even if some countries offer what is known as the “dole”, they are not substantial. This is the reason why these countries have strict labor laws that prohibit the companies from firing workers at will.

However, this is seen as an impediment to liberalization and opening up of the economies to the market forces of capitalism, the governments in most Asian countries are wary of letting the corporates hire and fire workers at will. This is one of the main demands made by corporates who ask for a flexible labor policy that would allow them to hire and fire workers according to economic circumstances and market forces.

The counter argument made by the activists and the policymakers is that these economies are not mature enough to handle and absorb the unemployed into society by giving them welfare benefits.

Hence, the contention here is that mass unemployment would lead to social tensions and unrest from the disaffected. As such, most Asian economies suffer from periodic bouts of social unrest and hence, they cannot afford to have more workers joining the ranks of the unemployed.

Some Suggestions to frame Labor Policies in the East

Without taking sides in this debate, it needs to be mentioned that the best course of action would be to have specific labor laws according to the sectors and the states or regions in these countries. This would enable seasonal variations in demand and supply for workers to reflect economic conditions rather than the socialist manner in which the current practice works.

Further, by setting labor laws for each sector and region as opposed to a uniform labor law for the entire country, the companies and the firms in each sector would be able to determine the optimal level of employment according to the economic forces.

When one considers the fact that different states and regions in these countries have differing rates of economic growth and economic development, it makes sense to protect the weak states and let the strong states or regions follow market forces. In our opinion, this would be the optimal solution to the crisis of over- employment and underemployment that plague the Asian economies.

Concluding Thoughts

Finally, it must also be mentioned that there are cultural factors at play here. For instance, being laid off in the West is seen as normal wherein in India, it is seen otherwise where social stigma to being laid off is more. Therefore, this aspect has to be considered as well when deciding on the appropriate labor policy in these countries.