Interview with Jordi Gual, Chairmanof the International Conference "Labor legislation must strike the rightbalance between flexibility and respect for the individual"IESE brought together a distinguished group of experts in economics,management, sociology and thoughtful entrepreneurs in the 3rd InternationalConference on Firms and Job creation in Barcelona,
June 19-20
 IESE Professor Jordi Gual chairedthe International
Conference held at IESE
What effect will monetary union have on unemployment?
In theory, entry in the Monetary Union need not have any effect on unemploymentrates as the labor market functions according to its own dynamics. The unemploymentrate is more sensitive to the continued existence of rigidities which canprevent job creation. However, it is true that if a country loses competitivenessonce within the monetary union, its unemployment rate may increase or itmay have to lower salaries to compensate. But, as I say, there is no reasonwhy this should happen. In your introduction to the book "The social challenge of jobcreation", you do not state a preference for Anglo-Saxon liberal legislationor Central European protectionist legislation. In your opinion, what featuresdoes legislation need to favor job creation?
We need a special type of legislation. The labor market is not a tomatomarket, people are not products. Within the market, the "decision-makers",that is, employers, have access to more information than employees. However,although these issues are relevant, under no circumstances do they justifythe existence of a rigid labor market. Legislation must enable companiesto adapt to change and to promote changes in location or functionality.Labor legislation must strike the right balance between healthy flexibilityand respect for the individual. Do you think that unemployment is an endemic disease of industrialsocieties and that the role of government is therefore confined to softeningits social, cultural and economic impact?
No, not at all. Unemployment is not an endemic problem. It is not inevitable.Populations have grown, technology has moved on and more jobs have beencreated. Fatalism abounds on the market. There will always be structuralunemployment of around 3-5% composed of people who have left one job andare looking for another and there is nothing wrong with this. Therefore,solving the unemployment problem is possible. It seems that European societies find it hard to accept the growthof temporary employment from a social and economic viewpoint. Will Europeansever understand that not having "a job for life" is no great tragedy?
I think that this "fever" will die down quickly. It is true thatsome consumer patterns have changed but they will soon pick up and peoplewill start consuming again. Moreover, interest rates have come down andpeople are starting to assimilate the idea that they can borrow money for30 years... Does tackling unemployment call for greater commitment on the partof employers?
You cannot ask employers to be completely selfless. However, if managersadopt a human perspective of their companies as a group of people whogenerate goods and services you can create labor relations that gobeyond pure market forces. So we are moving towards a society of the self-employed?
Our legislation is very protectionist. Employers and workers should be givengreater responsibility and autonomy. However the transition from one systemto another should be very gradual so as to not harm those workers unableto adapt to the new circumstances. Managers must also be involved in thisprocess of cultural change. Companies must motivate their workers so theyare willing to adapt to new jobs. | 