The price of a pink slip

Summary:It turns out, it costs less to sack a worker in the U.S. than it does almost anywhere else in the world. Suddenly, relocating Bolivia or Venezuela--places where workers cannot be fired at all--doesn't sound so bad.

The U.S. makes giving you the boot an easy choice.
This is a difficult time to be a worker. If you're in the financial sector or in one that is affected by it--in short, just about everyone with a job--you're likely feeling a squeeze brought on by the housing market collapse and the ensuing stock market loss of $160 trillion.

And sadly, when it is time for companies to figure out where to cut expenses, headcount is one of the first places they look. Shaving 10 percent of a workforce can save millions a year in payroll expenses, typically without losing 10 percent profit.

However, a sidebar in The Economist this week highlights exactly how much of a U.S. phenomenon the idea of slashing jobs to save money actually is. It turns out, it costs less to sack a worker in the U.S. than it does almost anywhere else in the world, as there are no penalties or compensation repay required to fire a full-time employee of even 20 years in the U.S.

In Germany, that same company would have to continue paying the worker the equivalent of 90 weeks pay, as would China. India requires about 55 weeks pay to lay off a 20-year full-time company veteran, and Britain about 23 weeks. After the U.S. (tied with New Zealand and Tonga in having no mandatory penalties), the country with the smallest fiscal punishment for firing a long-time employee is Japan, and even there the worker would receive an additional four week's pay.

Of course, this doesn't mean that laying off a U.S. worker, even a short-term one, can't be costly. Businesses often refer to the "cost of turnover," and what they mean is that the time they spend training another employee to do the same job, not to mention incurring legal fees, should a worker feel they were wrongly terminated. Nonetheless, the laws are in their favor, not yours, which likely has many-a-workers at least considering relocated lives in Venezuela or Bolivia, countries where workers cannot be fired at all.

Topics: IT Employment, China, India, New Zealand

About

Deb Perelman is a journalist in New York City with a focus on tech and the daily grind. Previously she was a reporter for eWEEK, leading the magazine and Web site's coverage of the issue and trends that affect IT workers.

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