US Workers Have the Worst Severance Packages

by Darwin on February 24, 2009

While not entirely surprising, I found this BusinessWeek article to be interesting in that it highlighted just how much US company severance packages lag behind our industrialized peers.  Of the 8 countries in the comparison, in terms of weeks of severance per years worked, the US was last, at 1.78 vs. the following other country results.  While the US is known for having a very “flexible” business environment, which many assign to the innovative and entreprenurial nature of the country, it isn’t always knows as being the stingiest – until now.

Netherlands – 4.08
Japan – 3.97
Germany – 3.63
Canada – 3.36
Brazil – 3.14
Britain – 2.92
France – 2.70

While the US is known for its fierce competitiveness and capitalism, we’re also known for being stingy with worker layoff severance packages.  On one hand, we have the most dynamic and entrepreneurial workforce on earth, whereby an employer can react quickly to market conditions and hire/fire at will in order to optimize payroll expenses with demand.  Similarly, recently separated employees can generally find work very quickly, as our historically low unemployment numbers highlighted leading into this recent unprecedented economic downturn.

Why is the US the Worst?

I do question the root of this country disparity though.  My initial reaction was ” Europeans and their Unions!”, but interestingly, the data cited referred to middle management employees; however the “worker” segment fared virtually the same in every country except Canada, which conferred much better benefits to management than workers.  It clearly isn’t a union issue.  Then I questioned whether this was a government-mandated severance level.  I found no evidence supporting that thought.  I guess it just comes down to our cold-hard capitalist culture versus a more nurturing, collective culture in other countries.

Don’t get me wrong, there’s no other country I’d rather start a business venture in, or work for that matter…I’d just rather be laid off somewhere else!

Related, I’ve compiled some articles on:

How to avoid or prepare for a layoff

Top 10 Careers for New College Grads

6 Questions to Ask Yourself about an MBA

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{ 1 comment… read it below or add one }

1 the weakonomist February 25, 2009 at 8:55 am

It isn’t simply the unions, but the labor laws the unions have helped pass. Canada also has more strict labor laws than the US.

So your initial assumption may be right, just needs to be rephrased.

Don’t know whether this is good or bad. Traditionally the US has had the better economy, so we ride higher, but sink lower.


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