For me, occupying thoughts in London on most days are "do I want to try the mature cheddar and pickles sandwich today?" or, "does this espresso come with the 10 pence student discount?" But I have been being a good little European student and have been reading the FT and the Economist diligently (esp. since my fellow students are young and pompous and I refuse to be showed up on current events.) As a result, I'm definitely paying attention to a few things that I find very interesting, and here is this week's installment of the news from Europe:
Germany last week announced that it would be subsidizing the wages of people in hurt industries directly so as to help their employers and thus the populace retain jobs. Some economists might say that this makes no sense, but perhaps it makes some (beyond the obvious political benefits) – this keeps people employed and not laid off by struggling employers, and keeps them off the dole. Furthermore, it does something for confidence and panic in the country which has to have positive effects and of course a working person is a healthier person than a despondent laid off one (and studies have proven this).
France announced that they would be doing the exact same thing.
Renault/Nissan which is a Japanese company that ate a French one and has a French CEO – was able to lay off workers in the UK last week (from the most productive car factory in Europe), but was unable to do so in France – France provided $ to keep them on, and has lay-off laws to protect workers. The CEO was quoted as saying, "It's just really hard to fire people in France." A fact that has stifled growth of manufacturing and innovative industries in the country for some time and has led to the stereotypes of unproductive French who unfortunately become the brunt of so many jokes the world over.
The UK is not considering paying car manufacturers to keep workers. Instead they are offering loans and aid to “green” industries as part of their bailout.
Critics say that laying off highly skilled workers (construction, auto etc.) and then rehiring them and re-training them all in a few years when the economy picks back up, makes no sense. If highly skilled workers know how to do things that are good and healthy for the UK's local industries, why should they be re-trained for something else, or worse yet incentivised to leave the UK to seek jobs overseas?
It's an interesting question from a political/economic lens of what's best for a country in the long-run beyond the knee-jerk reaction of "must save jobs! panic now!" In the US, my opinion is however, that our car companies and industrials are not all suitable to weather the storm and do need to be let go and that is the exercise foremost - what industries do we keep and why, and then how best do we preserve them through this downturn. God, I'm so glad I'm not a politician...
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