Move fast, break… people?
One of the positive developments in European policy thinking of the past few years is that the Commission seems to be more than ever inclined to listen to entrepreneurs and the ecosystem in general. One testament to this is the proposal for the “28th regime” apparently moving through the Brussels machinery with a decent chance of eventually getting implemented¹.
And while I'm really happy with this general direction, I hope that some of the wishes of European entrepreneurs stay unanswered. One thing I've heard quite often in the past couple of years is that the labour regulations of our continent are slowing down startup growth. Translated into plain English, it appears that at least some founders are rather unhappy with the extent to which employees are protected in most European countries, as opposed to the US where in most cases anyone can be fired on the spot.
Last time I heard this argument was just yesterday at the TNW Conference, during a panel discussion on the challenges European scaleups are facing, moderated by Dealroom's Orla Browne. Job van der Voort, CEO at Remote, talked at length about this particular point. Among other things, he brought up the example of how companies are required to keep paying employees' salaries in case of long-term sickness — a practice that, according to Job, often gets abused.
(A quick side note here: while the description of employer's obligations is correct for the Netherlands where both Job and I live, it seems more common in European countries to divide the burden of sick leave payments between the employer and social security.)
To deal with the issue, Job floated the idea of creating a special legal entity for startups (I guess through the “28th regime”) where employee protection would be lower than with “normal” companies, allowing the startups to move faster and be more flexible. The idea, in my view, is problematic in multiple ways (including from the ethical standpoint), the most obvious of which is — who on Earth would want to work for a startup then?!
I mean, seriously: in most cases working for a startup already means putting in long unpredictable hours for a salary that's lower than you'd get in a more established company or corporate environment. Now, let's add reduced employee protections to the mix — what's not to like?
The most likely consequence such move would have is that startups would have to increase wages, at least in geographies where talent has enough choice of employers, or look for remote employees based in less developed regions². That, of course, constitutes the bread and butter of Remote (and its competitors), which makes the entire argument at least somewhat self-serving.
While I'm all for fixing the capital markets, streamlining the bureaucracy, and getting rid of the Germany notaries — let's try not to throw the baby out with the bathwater. Not every European regulation is bad, and what serves certain players' interests doesn't always translate into benefits for the ecosystem as a whole.
¹ There's still a chance that the implementation will be screwed up later on, but the point still stands — the ecosystem spoke, and the policy makers have listened.
² Another possibility is for startups to hire less experienced, productive, and/or reliable employees who would accept a lower wage — but let's generously assume that everyone here wants the European ecosystem to thrive rather than decline.
