I saw an article today about the UK labor market. Stay with me - this does get interesting! In the article, they talked about the idea propogated on the right that making it easier to hire and fire people will make businesses more efficient. We've all seen some variation of this story - the teachers nobody can fire so they just put them in a room collecting a salary, etc. (usually in combination with some sort of anti-union rhetoric).
But there's a reason we often buy these stories, as the article notes: "Common sense says that if firms can easily fire people then workers’ incentives to work hard are sharpened by a greater fear of the sack, whilst companies can more easily adjust their workforce to changes in market conditions."
As with many things, however, our common sense might be wrong. The article notes that people might change their behaviour based on the knowledge that their job is precarious. Which got me thinking about my own behaviour as a worker. I've never planned to stay at a company - the idea of a 'job for life' has never even crossed my mind. I've always thought it sounded pretty dull. So I've gotten jobs, done them until I felt like I had a handle on them, like I'd learned what I came to learn, and then left. I've never assumed my employer would be 'faithful' and I've never felt I owed them anything. It's a pure business transaction. But, as the article points out, this is a rational reaction to a labor market without any protections. Which made me wonder if my behaviour would have been different had I come up in a different set of, e.g. labor protections.
Thinking about it as an employer, I'm an expensive employee - I'm just going to get trained, and then you'll have to hire a new employee and start over. But I also don't care if you don't offer any guarantees about the job. In fact, I don't expect it. If I underperform, I'm gone. OK. That's the bargain. But, now that I've reflected a bit on it, I'm not sure that's a better deal for the employer. Which would you rather have - underperforming employees that you can't get rid of, or high-performing employees you can't keep? I'm not sure which way leads to better outcomes.