Re:Company Update
by solatic on Friday January 18, 2019 @12:23PM
(#18940894)
> They found a solution by reducing the work hours for a large percentage of their workers (with an accompanied pay cut) instead of firing a smaller percentage of them, which allowed them to retain almost everyone and at the same time reduce costs.
More companies don't do this because it's not in labor's favor, in aggregate. Regardless of economic conditions, companies always have an interest in paying their workers less, as this cuts costs and improves profit margins. In aggregate, companies can't continually cut wages because workers would leave for employers who would pay them market rate, and so employers are forced to lay off employees to cut costs - precisely because, in a low-trust environment, it's the only way to convince labor that the cost cutting is actually necessary, because the layoff hurts the company too by way of lost productivity. The upwards pressure is called "sticky wages", and it's one of the reasons why economies need at least a small amount of inflation to be healthy.
German auto manufacturers could do it because a) they have much better labor relations on the ground and b) the 2008 recession was a real phenomenon that everyone knew about. Their trust allowed them to come to a more ideal solution, but for most companies around the world, real people and realpolitik get in the way of the ideal solution.
More companies don't do this because it's not in labor's favor, in aggregate. Regardless of economic conditions, companies always have an interest in paying their workers less, as this cuts costs and improves profit margins. In aggregate, companies can't continually cut wages because workers would leave for employers who would pay them market rate, and so employers are forced to lay off employees to cut costs - precisely because, in a low-trust environment, it's the only way to convince labor that the cost cutting is actually necessary, because the layoff hurts the company too by way of lost productivity. The upwards pressure is called "sticky wages", and it's one of the reasons why economies need at least a small amount of inflation to be healthy.
German auto manufacturers could do it because a) they have much better labor relations on the ground and b) the 2008 recession was a real phenomenon that everyone knew about. Their trust allowed them to come to a more ideal solution, but for most companies around the world, real people and realpolitik get in the way of the ideal solution.