By Javier Paz García

Image credit: Pixabay

 

It would seem that defending the free labour market goes against employees. For example, how can allowing an employer to freely fire its employees be beneficial to employees? The reason is that the free market dynamizes the economy, forces companies to be efficient and thus increases a country’s growth rates. It is only to the extent that a company becomes more efficient and generates higher revenues that it can pay higher wages.

The rigidity of the labor market has similar consequences for wage earners because it creates incentives to work less, knowing that no matter if they are lazy or hard-working, their employer cannot fire them. The rigidity of the labor market decreases the productivity of a company, while decreasing the ability to pay wages. On the other hand, it always seemed illogical to me that the notion of keeping work sources from the clutches of the greedy capitalists should be protected.

Even accepting the notion that the capitalist is greedy and only interested in making money, we have to recognize that in order to make money it is necessary to attract and retain good workers, therefore it is in the best interest of the capitalist to retain his good workers and give them a good deal and payment that prevents them from changing jobs. On the other hand, a flexible labor market generates greater work options and reduces unemployment rates, which benefits the wage earners.

If the above theoretical explanation is not sufficient to convince the reader that the free hiring and firing of workers in a framework of free competition is the best way to improve working conditions, perhaps reality will serve as an argument. It is not in socialist countries where wage earners enjoy the best working conditions, but in the most capitalist countries.

To cite a specific example, the salaries of a trailer driver in the United States are around seventy thousand dollars plus benefits, while in Bolivia, a driver who works more hours than his American counterpart, on more difficult and dangerous roads, hopefully earns eight thousand dollars a year. And so we can talk about miners, mechanics, secretaries, domestic workers, etc. whose salaries in the United States and Europe allow them to have a house, a vehicle and adequate food, while their counterparts in the second and third worlds work to barely escape misery and hunger.

 

This article was published by Libertad.org on September 27th, 2019. Reproduced on Political Hispanic with authorization from said source. Also translated by Political Hispanic.
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