Sunday, December 17, 2006


In the newspaper business, the word "churn" refers to the turnover in subscribers. Since there is a cost associated with attracting subscribers, low churn is an indicator of efficiency.

On This Week With George Stephanopoulos today, George Will provided a startling statistic: In the US every year, one-thirteenth of all jobs are lost. More jobs are created, but there is growing churn in the workforce, largely caused by globalization. This trend is not going away. If anything, employment churn will increase.

Other than during recessions, high employment churn is a new thing. We probably can't do anything to improve the degree of churn, but we need to adjust to it to help displaced workers. We need improved employee protection around the area of lay-offs and severance pay. We need better institutions to help people retrain and find work. We need UI payments to kick in sooner.

Our current systems were created not only for a time of lower employment churn, but also for a time of greater unionization. In today's world, most people do not have a union ready to fight for them. We need strong employment regulations that protect everybody. As in places like France, we need the state to step up and provide protection. But this isn't going to happen unless we demand it.

Unfortunately, elected officials all have extremely generous pension plans and the civil servants who provide much of the legislative initiative are already protected by the most powerful union contracts in the country. Stronger employment protection isn't going to happen unless the people rise up and make it an election issue, and even then it won't happen quickly.

If we don't act soon, many Canadians are going to find themselves in deep distressing poverty when they retire. When young people think their investment strategy is adequately preparing them for retirement, are they considering that they will almost certainly be laid off at some time during their career... and most probably will have to start again at a lower paying job? And that they may need to dip into their retirement savings during the period that they're unemployed? That stock market/housing market collapses could wipe out their personal retirement savings?

We do not have adequate employment protections for the current world.

Related Posts
In Praise of Regulations
Employee Protection


1 comment:

Anonymous said...

"Other than during recessions, high employment churn is a new thing."

I wonder if this is so. I've just been reading a diary of a man who lived in rural Timble, Yorkshire, in the late 19th century and early 20th. His jobs included stonemason, farmer, pork salter, seller of paraffin, tea, and manure (not all at the same time), waywarden for local highways, local authority plan inspector, census official, rate collector, vaccination officer, parish councillor, and registrar.