Lessons from the states | Pakistan Today

Lessons from the states

The wreckage appeared overwhelming the past few days as U.S. retailers furloughed hundreds of thousands of employees. The total might hit 1 million by week’s end. As the coronavirus pandemic keeps Americans confined to their homes, nearly every industry has been negatively impacted by the disease, and businesses losing out on cash flow have started laying off workers. In mid-february Hilton, a hotelier, and its employees had something to celebrate.

For the second year running the company came top in Fortune magazine’s list of best American companies to work for. The perks provided to its 62,000 direct employees in America included extended parental leave, Under Armourbranded uniforms and facilities to let travelling staff ship breast milk home. A mere six weeks later, on March 26th, tens of thousands of those pampered employees were given notice that they would be thrown out of work because of the covid-19 pandemic. That was the day weekly jobless claims in America spiked by 1,000% to 3.3m.

The stratospheric surge of Americans seeking unemployment benefits contrasts with the situation in western Europe. Companies there are struggling just as hard but many are keeping workers on the books at reduced pay. That is a familiar story. In times of economic upheaval, European firms rely extensively on schemes in which the government picks up part of the wage bill, such as Germany’s Kurzarbeit, France’s chômage partiel and Italy’s cassa integrazione. Traditionally, America has shunned such feather-bedding. From frontier days its labour laws have given employers leave to cull jobs almost at will. Not for nothing did the country elect a president whose catchphrase was “You’re fired!”In the current crisis it may seem fair to ask American firms to take a more European approach. After all, business activity has collapsed not because of slothful work habits, but because governments have ordered people to stay at home. This is not a slump that needs to be fixed with an orgy of creative destruction in the jobs.

Syed Tahir Rashdi