Business in Europe

After 50 years of encroaching socialism in Europe, some leaders are beginning to recognize that free market competitiveness is impeded by social programs and policies. Both France and Germany are gasping with chronically sluggish economies while sporting unemployment rates comfortably above 9%. Yet, for those that are working, both countries provide exceedingly generous entitlements. In Germany and France, one can look forward to a very comfortable pension as average retirement ages are falling. For those that aren't working, unemployment benefits are enticing.

Europeans have also instituted federally mandated vacations, as much as six weeks per year, which sounds good but hardly contributes to maximization of productivity. Couple extravagant vacation time with fewer average hours worked per week and business is greatly impeded in generating sufficient revenue to pay all the bills. If no one is at work, nothing is produced to sell.

In summary, the prevalent European socialist philosophy has helped stagnate the economies and prompted companies to rethink how they are going to conduct business. As reported last week, DaimlerChrysler announced that they needed relief from the demands of the labor unions and asked for some concessions to cut labor costs. This caused work stoppages and a national day of protest in which 60,000 participated. Undeterred, the company said they would move a portion of their Mercedes production to South Africa with a loss of 6,000 jobs in Germany if concessions were not granted.

The threat was taken seriously and DaimlerChrysler got concurrence from the trade unions to expand the work week from 35 to 39 hours. Jobs were saved in Germany but, more importantly, a precedent has been set for establishing a standard work week of longer duration. DaimlerChrysler's success with the trade unions piggybacks nicely on the success of Siemens AG who won similar concessions last month in saving 2,000 jobs they threatened to move to Hungary. These occurrences will undoubtedly embolden other companies to challenge the status quo and allow them to follow DaimlerChrysler and Siemens AG to a more competitive position in the marketplace.