Thanks to John Cochrane for this entrepreneur’s perspective on creating jobs in Hungary — by Andor Jakab:
I stumbled across this lovely little post from Hungary, titled “This is why I don’t give you a job“.
It’s full of classic unintended-consequence reminders for economists. For example, protecting people by not letting employers fire them means that people don’t get jobs in the first place.
Prof. Cochrane continues with an outline of similar anti-job USA policies – do read all of Hungarian Outrage. After reading the linked Andor Jakab post I’ve been studying the related active discussions on such as Reddit, and Hacker News. It still isn’t clear to me what is happening in Hungary. It does look like the democracy is being taken-over by the new government.
Economically, how well are the Hungarians doing relative to comparable economies? PPP GDP per capita looks similar to Poland, much lower than Slovenia or Czech Republic (see thematic map and tabulation).
Andor explains why he will not sell his apartment to fund the startup of a new business. He goes through the financials and especially the labor laws which make it impossible to create the new jobs. None will surprise economists, but are likely not understood by the average Hungarian voter. Excerpt:
(…) I wouldn’t hire a woman.
The reason is very simple: women give birth to children. I don’t have the right to ask if she wanted to. If I had the right, and she answered, she could deliberately deceive me or she could change her mind.
Don’t get me wrong, I don’t have any problem with women giving birth to children. That’s how I was born and that’s how my child was born. I wouldn’t hire a woman because when she gets pregnant, she goes for 3 years maternity leave, during which I can’t fire her. If she wants two children, the vacation is 6 years long.
Of course, work has to be done, so I would have to hire somebody who works instead of her while she is whiling away her long holiday years. But not only couldn’t I fire her while she’s away, I couldn’t fire her when she comes back either. So I would have to fire the one who’s been working instead of her the whole time. When a woman comes back from maternity leave, I would be legally forced to increase her salary to the present level in her position. Also, I would be required to give out her normal vacation days, that she accumulated during her maternity leave. When she finally comes back to work, she would start with 2-4 months of fully paid vacation.
I wouldn’t hire people over 50 either.
Not that I have any problem with the most experienced professionals. I wouldn’t hire them, because they are soon in the protected age. And then I would be trapped with them, similar to the trap with employing women. You can’t fire people in the protected age, so I would have to pay the salary and its total cost even if he or she doesn’t work well, or at least up to acceptable standards. I couldn’t fire the protected employee, but someone would have to do the job right; so I would have to hire another person. It’s all right with me if they’re protected, but then I won’t hire them.
I would only hire 25-50 years old men.
They’re also risky to hire. Since I don’t have the right to fire them, if for any reason (I don’t have enough income, or I don’t like how they work) I want to. There’s a high risk that they will go to court, and there’s a high chance they will win. But this risk I would be prepared to handle.
Andor’s post has generated a lot of heat – perhaps 90% negative. In response he has written at least two followup posts attempting to better explain his reasoning: I don’t give a job. Am I being antisocial?
I have added Andor Jakab to our daily RSS feeds.