Transcript Labor Standards at the EU Level and US National Level

COMPARING AND
QUANTIFYING LABOR
STANDARDS IN THE
UNITED STATES AND THE
EUROPEAN UNION
Richard N. Block
Peter Berg
Karen Roberts
Michigan State University
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Labor Standards at the EU Level
and US National Level
• US and EU are the largest economies in the
world
– About US$/ € 10 Trillion
– Another US$/ € 380 billion with new EU
members in 2004
• Labor standards may have effects on
economic competitiveness and consumer
demand
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Quantitatively Analyze Labor
Standards in the EU and US
• Levels
– Federal in US
– Community in EU
• Basis for comparing one country with a political
and economic union of sovereign countries
– EU becoming increasingly economically integrated
since 1950’s
– Political Integration
– EU exercising economic and political power like a
sovereign state
• GE-Honeywell Merger
• WTO complaint on US steel tariffs
• Microsoft
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Differences and Similarities
• Differences
– EU – Subsidiarity; Treaty-Based
– US - Federal Supremacy; Constitution-Based
• Similarities
– EU
• directives on range of labor and employment issues
• questions of uniformity and roles of member states and
community
– US
• Federal labor and employment law preempts states
• Historic and continuing controversy on proper role of states
and federal government in regulating employment
– Pre 1935 – interstate commerce
– Post 2000 – state sovereignty
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Views on Employment
• United States
– Market creates optimal labor market outcomes
– Minimal government regulation
• EU
– Unregulated markets create an imbalance of power
between employer and employee
– Government must create countervailing power
• A naturally occurring experiment
– Differences in regulatory views
– Importance of measuring differences in the regulation
of the labor market
– Differences in economic outcomes
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METHOD OF MEASURING
LABOR STANDARDS
• Based on Block and Roberts (2000) and Block,
Roberts, and Clarke (2003)
• ANALYSIS OF THE SUBSTANCE OF EACH
STANDARD
• STATUTORY PROVISIONS
• NATURE OF ENFORCEMENT
• DEVELOPING AN INDEX NUMBER BY
– MEASURING THE STRENGTH OF VARIOUS
PROVISIONS AND
– WEIGHTING THE IMPORTANCE OF A
PROVISION WITHIN A STANDARD
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DEVELOPMENT OF AN INDEX
(GENERATING A NUMBER)
• TWO PARTS OF EACH INDEX
– SUBINDEX THAT IS GREATER THE
GREATER THE PROTECTION GIVEN TO
EMPLOYEES
– A WEIGHT GIVEN TO EACH PROVISION
WITHIN A STANDARD
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PROVISION SCORING
• EACH PROVISION GIVEN A SCORE
BETWEEN 0 AND 10
– 10 = STRONGEST POSSIBLE PROTECTION
AMONG ALL JURISDICTIONS
– 0 = NO PROVISION OR NO PROTECTION
– BETWEEN 0 AND 10 FOR PROVISIONS OF
INTERMEDIATE STRENGTH
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Labor Standards Defined and
Analyzed
• A governmentally established term or
condition of employment that is mandatory
– imposed and enforced by government
• Do not consider
– Charter of Fundamental Rights
• Debates over whether it is binding
– Differences in enforcement
• national level
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Six Possible Regulatory Schemes
• (1) regulation at the community level in the EU
and at the national level in the United States
• (2) regulation at the community level in the EU
but no regulation in the United States
• (3) regulation at the national level in the United
States but no regulation in the EU
• (4) regulation at the community level in the EU
and at the state level in the United States
• (5) regulation at the national level in the United
States and the country level in the EU
• (6) regulation at the country level in the EU and
the state level in the United States.
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Levels Included
• Limited to standards common to highest
governmental level
– (1) regulation at the community level in the EU and at
the national level in the United States
– (2) regulation at the community level in the EU but no
regulation in the United States
– (3) regulation at the national level in the United States
but no regulation in the EU
• Did not consider analyzing standards regulated at
state/country level
– Weighting scheme on percentage of US or EU
workforce covered by legislation
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Standards Analyzed
•
•
•
•
•
Minimum Wage
Working Time
Paid Time Off
Collective Bargaining
Anti-Discrimination
• Occupational Safety
and Health
• Advance Notice of
Large-Scale Layoffs
• Employee
Involvement
• Parental/Family Leave
• Changes of Ownership
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Scoring Summary
• Assumes all standards equally important
• Total Scores
– US = 47.35
– EU = 68.05
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Minimum Wages
• US
– Has a minimum wage
• EU
– No minimum wage directive
– Prohibited by Treaty of Amsterdam
• Scores
– US = 9.5
– EU = 0
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Overtime and Working Time
• Different Models
– US
• Overtime penalties and incentives
– EU
• Direct regulation
• Direct Regulation stronger protection
– Employees in U.S. can be forced to work overtime
• Scores
– US = 3.5
– EU = 5.5
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Paid Time Off
• US
– No required paid-time off
– Some holidays but no pay requirement
• EU
– Four weeks paid annual leave
• Scores
– US = .83
– EU =7.5
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Collective Bargaining
• US
– National legislation protecting collective bargaining
• EU
– No community-level legislation
– Charter of Fundamental Rights
• Scores
– US = 6.67
– EU = 3.33
• Caveat
– A case where national differences may matter
• Do not address laws or traditions in EU countries
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Anti-Discrimination
• Both EU and US prohibit discrimination based on
race, gender, age, disability, religion, national
origin
• EU also prohibits discrimination based on sexual
preference and considers comparable worth a
factor in pay equity
• Scores
– US = 9.35
– EU = 10
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Occupational Safety and Health
• EU
– requires employers to consult with employees on on
safety
– To provide information to employees
– To provide training
• US
– General duty provision
• Scores
– US = 3.5
– EU 8.0
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Notice of Large-Scale Layoffs
• Amount of Notice
– EU – 30 days
– US – 60 days
• EU covers small firms
• Scores
– US = 8.25
– US = 8.75
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Information and Consultation
• US
– No rights for nonunion employees to be independently
involved in decisions
• EU
– European company directive requires establishing
committee
– Community Scale undertakings
• Scores
– US = 0
– EU = 10
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Parental Family Leave
• Generally comparable, but with different
structures
• US
– 12 weeks of unpaid leave during a 12 month period for
personal or family-medical reasons
• EU
– Maternity – 14 weeks
– Parental – three months of each child up to age 8
• US permits more leave, but for narrower reasons
• US=EU=5
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Ownership Changes
• EU
– Protection to employees, new owner must honor the
employment contract
• US
– No general statutory protection
– For unionized employees a bargaining obligation if
• Successor
• Hires a majority of predecessor’s employees
• Scores
– US = .75
– EU = 10
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Conclusions
• Overall, EU labor standards at the community
level higher than US standards at federal level
– Assumes all standards equally important
• EU higher than US on
– working time, paid-time off, occupational safety and
health, employee involvement, and changes of
ownership/transfer of undertaking.
• US higher than EU on
– minimum wages and collective bargaining
• Approximate Equality on
– Discrimination, large scale layoffs, parental/family
leave
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Analysis
• Consistent with a priori notions
• Different conceptions of the employment
relations
– US - reliance on labor market outcomes,
assumption of equality of bargaining power,
skepticism of government intervention
– EU – skeptical about labor market outcomes,
assumption of inequality of bargaining power,
reliance on government intervention
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A Massive Social Experiment
• EU
– Capitalist system and private property with
relatively heavily regulated labor market
• US
– Capitalist system and private property with
relatively lightly regulated labor markets
• Which works best?
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