Purpose – The purpose of this paper is to analyze the popular belief that for organizations (and countries) to be economically prosperous they require a highly flexible industrial relations framework in which to operate, that provides minimal protection for employees. Design/methodology/approach – The paper uses new data from the World Bank and expert commentary to assess the validity of the above‐mentioned belief. Findings – The paper explains that there are numerous examples of countries that are highly competitive and prosperous yet have rigid labor‐protection legislation and many instances of countries with very flexible labor law that are performing poorly economically. Therefore, there is no absolute link between economic prosperity/competitiveness and lax labor laws. Practical implications – The paper advances the view that human‐resource specialists, through the decisions they make, can contribute to their organizations' competitiveness irrespective of the legislative framework in which they must operate. Social implications – The paper argues that workers' protections in the workplace should not be used by legislators, pundits or employer interest groups as a reason for explaining economic woe or be portrayed as a burden that, if lessened, will lead to increased economic competitiveness. It is possible to have strong worker‐friendly labor laws and vibrant, competitive industry. Originality/value – The paper provides an up‐to‐date assessment of current economic conditions in different countries and relates these to newly released World Bank data. Adds to the ongoing discourse about labor law and its relationship to economic prosperity.
Human Resource Management International Digest – Emerald Publishing
Published: Aug 30, 2011
Keywords: Labour law; Competitiveness; Employment protection; Economic conditions; Competitive strategy