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Efforts by Companies and Firms

In the above article the various editors examine the government efforts to tackle economic recession through employee layoffs, compulsory furloughs, and shorter workweeks and wage cuts. Such measures directly and indirectly contribute to lower economic growth and stagnation both internationally and in the local arena.

While comparing European companies (that have adopted shorter workweeks and mandatory time off) and American companies (that have embraced layoffs to control labor costs), Corinne Maier adopts the view that the variation in strategy adopted has to do with cultural differences as well as the social safety net that many European governments offer. For American employers, they have opted for one approach i. e. layoffs versus shorter workweeks and wage cuts; it is better for the economy.

However, Heather Boushey on ‘How to Help the Economy, and Families’ observes that firms in the United States should consider cutting back in this recession by introducing shorter workweeks, flexible schedules and more time off, rather than laying off workers. A complete layoff — especially in this economy where there are more than four unemployed workers for each job available — could be devastating to a family’s economic well-being. On top of lost income, since most workers get their health

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insurance from their employer, a layoff can mean the loss of access to health care for the worker and rather possibly their entire family.

In the United States, 6 in 10 workers who have become unemployed over the last 12 months have not received any unemployment remuneration. Thus, more than one out of every two unemployed workers ends up having to severely curtail their consumption, which pulls down economic growth since 70 percent of the United States economy is based on consumer spending. Keeping more people employed, even at shorter hours, helps maintain consumer spending, which in turn, helps to keep the overall economy going.

Corinne Maier in the article Recession Fighting the French Way, subscribes to fhough that France has the ultimate weapon for fighting the economic crisis: free time. Long live the 35-hour week, though it was once sentenced to the scaffold by President Nicolas Sarkozy. The law reducing work hours, known in French as R. T. T. , today is like a shock absorber of the crisis. Businesses in trouble are using the R. T. T. rule to avoid layoffs. Its proof during last Christmas, none of the salaried people in Paris were working. Several of them saying; “My Company pushed us to take the R.

T. T. between Christmas and New Year’s Day. ” The translation being since there’s no work, mandatory days off were being imposed on employees in the pretext of holidays. There are numerous trade-offs in the choice between layoffs and work-sharing, the term for reduced hours or rotating furlough. From the employer’s point of view, layoffs have the benefit that they generally save much more money than work-sharing, because layoffs eradicate the fixed expenses of employment, like benefits, administrative costs and the costs of maintaining a place for people to work.

In some companies, these overheads are substantial. But work-sharing has the disadvantage that it can hurt workers’ self-esteem by reducing incomes. Germans are justifiably proud of what they call the ‘social market economy’. In this economy there is generally a tighter bond between employees and the company because of a shared dedication not just to profits but also to a sense of community, or “Gemeinschaft. ” Thus, workers are quite willing to forfeit part of their paycheck or their workweek to sustain fellow employees on the payroll.

Therefore, it remains to be seen whether large numbers of firms take on shorter workweeks and more time off or whether this trend will continue once the recession is over. If done right – that is, in a way that works for employees, as well and employers – greater workplace flexibility may help families struggling to balance work and family responsibilities. It could also add a little boost to our economy just when we need it. The global economic recession crisis has affected both strong and unstable economies in the world.

Economies and companies in an effort to control the crisis ought to consider factors as the foreign investors at home, the market share in the industry and their production capacity. As a result measures to be implemented will not only serve to end the problem in the short term but also in the long run. As the major foreign exchange earner through forein direct investments, the forein investors have to be protected in times when the government resorts to restrict their operations through quotas and licensing. On the other hand, firms that intend to tackle the crisis should put into consideration the external envuronments and operations.

The GDP of America is directly affected by their option of employee layoffs. Such aspects of our economy that control our GDP are the law of demand (The law of demand determines how much the people want and are willing to pay for a good or service. The law of demand says that the lower prices go, the more people will want). This result from the fact that unemployed workers are constrained in their spending therfore the government’s dependance on consumer spending is greatly hampered. In conclusion, most countries among the developed economies opt for more or less similar measures in dealing with the global recession.

Apart from layoffs adopted by the United States, compulsory furloughs are entertained by most other economies. As expected, concern for the welfare of uneployed workers upon relief from duty remains in the hands of their families with the exception of Germany and other few economies, where the fellow workers sacrifice to ensure the health of fellow retrenchees. ? References The Editors, (2009, March 29). Europe’s Solution: Take More Time Off. The New York Times. [Online]. Retrieved April 14, 2009, from http://roomfordebate. blogs. nytimes. com/2009/03/29/europes-solution-take-more-time-off/

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