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Beware of the Human Resources Laws Overseas

Have you ever wondered why you see people in the pubs in Europe all day? When we walk around American cities, at 2:30 p.m. people are working and the restaurants are empty.

Yet, in Paris, Amsterdam, London or Rome, we see locals having coffee or drinks, socializing during normal working hours. What are the reasons for this?

First of all, the locals may not work the kinds of hours we Americans do. It's quite possible that the people you see sipping Cinzano are off the clock. Germans average a 35-hour work week, so you could be catching the "Hoffbrau Haus crowd" after a shift at work.

However, there are alternate explanations.

The human resources atmosphere in many countries obligates employers to commit to an employee with a "permanent contract."

This seems strange to Americans. U.S. companies do pay into unemployment benefits, and discharged employees often receive unemployment checks for a set period.

In Europe, those unemployment laws are much more stringent and employee-friendly. And employers may be paying a much larger share (50 percent isn't uncommon) into the unemployment fund. Naturally, rules are country-specific, but remember that socialized (therefore subsidized) health care and free university tuition are common benefits available to everyone in most Western European countries.

The money has to come from somewhere: high personal income taxes and enormous corporate taxes and fees.

As an example: In Austria, when one opens a bank account with 1,000 Euros, it magically becomes about 920 Euros after the bank takes all of its fees. Once a bank deposit is made, the bank will be subject to various government fees.

French students are protesting the peeling back of worker benefits. If France wishes to compete on a world scale in any industry that's dependent on high labor content, then CEOs need to be able to hire and fire at will. When large-client orders come in, a firm needs to be able to bring on more people. When business slows down, companies can't survive unless they can reduce their variable costs.

But in France, labor always was seen as a fixed cost.

With the French government as a partner in most French industries, firms exist not only to provide value to customers, but also to provide jobs.

The HR issues extend way beyond employment. They can include what you can (and can't) ask of an employee. Laws may encompass work hours, counter heights, safety equipment, desk space, smoking permission, travel restriction and bathroom facilities.

For example: German mothers receive one full year of maternity leave from their employers. And no one can be terminated for being pregnant.

In the United States, we believe we're one of the more progressive, humane countries. We can't ask personal questions (sex, religion) on job applications.

Yet Europeans often call American employees three-time losers:

How can U.S. firms entering foreign markets escape some of the HR bind?

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