Opinion: ParticipationPOSTED: 01/15/13 12:59 PM
Curacao intends to put its doomed 80/20-rule into practice – obliging companies to have at least 80 percent locals on their staff. It is the surefire way to increased unemployment for the very people politicians think they are going to protect this way. It’s not something the economy is waiting for – not in Curacao and absolutely not in St. Maarten either. We’ll get back to this in a minute.
In the Netherlands the government also has designed a positive discrimination law. This one is designed to help handicapped people find employment. Like with the 80/20-rule, the intentions are good. The so-called participation law obliges Dutch companies with at least 25 employees to have 5 percent handicapped workers on the payroll. That’s 1.25 workers for every 25 employees.
Kees Cools, a professor in business economics and Nelleke Cools, an adviser for strategic communication write in an opinion piece in Trouw that a quota-system comes down to rigid coercion. They note that economic research has established that coercion, for instance in the form of rigid rules, leads to lower performance.
As an example they refer to a company in Delft that produces household appliances. In one production hall 160 handicapped people from a social workshop find employment. They begin every weekday at a quarter past seven and they get paid per piece they produce. If the company has to place these 160 workers on its payroll, it will increase production cost. That way the company will price its products out of the market, so it will lead to dismissals.
But coercion also leads to hanky-panky, the authors note. Companies that are not used to work with handicapped people will start by looking through their payroll to find employees with minimal handicaps; they will explore the limits of the legislation and offer employment to workers with very light handicaps. Those with more serious handicaps will be left on the sidelines.
Only 5 percent of Dutch companies currently employ young handicapped workers under a law called Wajong. The authors furthermore point out that handicapped workers need supervision. That was available: 15 percent of the hours a handicapped employee works. But within three years that supervision (provided by an external organization) will be limited to 3 percent – 1 hour and 12 minutes on a 40-hour work week and proportionally less for those who work fewer hours.
Supervision is not only crucial for the integration of handicapped employees. It will also come into play it Curacao decided to rigidly enforce its 80/20-rule. The main reason why companies employ foreigners is because they are looking for expertise and skill. If they don’t find it on-island, they start shopping around elsewhere.
This does not mean that locals are unable to learn those skills or to acquire that expertise. That is again a matter of supervision, or, as the islands want, of working with counterparts.
It is easy to see that forcing companies to abide by such an 80/20-rule will lead to disaster, if not to Greek situations.
Under the old George Papandreou, the Socialist Party (Pasok) in Greece gave away jobs like they were candy to their voters for more than twenty years. It resulted in a bloated civil service payroll and in a system wherein it was hard to find somebody who actually knew what he or she was doing. The system bankrupted the country, the way Curacao’s system will bankrupt its economy.
There is nothing against creating employment opportunities for the local population. On the contrary, this is a mission every government ought to take to heart. But the approach has to be smart, and it has to be geared towards taking those locals to the next level.
A good system would be to give preferential treatment to locals if their skills match those of a foreign candidate. But skill, not place of birth has to be the leading argument.
If companies are forced to hire employees based on the fact that they were born in a certain place, productivity is guaranteed to go down and in the end companies will go out of business. Smart companies may not even wait that long: they will take their business elsewhere. Altogether, this will result in fewer jobs and in more unemployment. Exactly what politicians do not want – or so they say.