Europe, Tech and War

Listen to the Podcast (in German)

Extracts from the transcript, translated into English:

[...] Good day ladies and gentlemen. Hello dear Michael. Hello dear Bert. Today I would like to talk to you about an article published in the FAZ at the beginning of this month. It is a relatively short text by the president of the Science Centre for Social Research in Berlin, Ms. Fuchs Schündeln and Benjamin Schoeffer, an economics professor at the University of Berkeley. And both represent the thesis, yes, we can talk about whether it makes sense or not, that in Germany the existing Employment Protection Laws, the rules of the Employment Protection, should be relaxed. And as a reason, it is stated that compared to the USA, productivity growth in Germany is much lower and as a result of the crackdown, the labor market regulation, difficulties in structural adjustment. Both would then lead to less disruptive innovations, and as a result, the significantly lower use of AI is introduced. [...]

They don't say that the employment protection should be loosened in general, but for well-educated and well-earned workers. And I think that's the right approach, regardless of all the differentiated arguments that you have introduced. [...]

In the tech sector you have the problem that nine out of ten projects fail. If that is the case, you need a high flexibility of adaptation, both organizational and occupational, in order to be able to react accordingly. [...]

And then there is an exciting study by Oliver Coste, a long-time economist working in the Brussels administration, who analyzed the costs of failure with a high empirical effort. And I find it very attractive. [...]

If you fail, you have relatively low follow-up costs in the USA. And you have relatively high follow-up costs in Central Europe, not everywhere, but in Central Europe. [...]

If you fail, you still have seven months in the USA to do with cleaning, protection costs, labor costs, what we would call social plans, what the Americans call it, to pay. In Germany, the Netherlands 31 months, in France 38, Italy 52 months, in Spain 62 months. Then comes a middle group, Sweden, the UK, Sweden 10 months, Great Britain 18, and now Switzerland 2.5 months, Denmark 3.5 months. And the argument here is that it has to do with specifically for such sectors, which are associated with high failure rates, a faster adaptation of employment is possible. [...]

We are stuck in the classic sectors where we are super good, where we make incremental optimization, where we still polish a bit in the back and a little bit there and a little bit more beautiful. [...]

So there are several elements, where the European labor market order, with foreigners, with Denmark and Switzerland, both are very sympathetic to us. Sweden is also much more flexible. This is also a very sympathetic country, that you can do something with it. If you look at it, the flexible labor protection rules in Switzerland lead to the fact that this country, shortly before Denmark, is in first place in the IMD Competitiveness Ranking. [...]

We can economically revitalize Germany only if we question the traditional industrial structure. That is, in my opinion, the answer. [...]

You can call it flexicurity. That was the debate that came from Denmark at the time. And indeed from Denmark. Denmark is always the best with the best proven EU state when you look at the international rankings, because they simply put different weights on the labor market. Much higher minimum wage, but much lower labor protection over employment protection. And the question is, could not a differentiation of employment protection be an exciting perspective?