


How Europe crushes innovation
Labour rules devised in the 20th century are hobbling Europe in the 21st
There are two ways for Western companies to sack lots of people. The American one involves the boss inviting hundreds of unsuspecting employees on a Zoom call, offering them a few months’ wages as severance and insincerely wishing them luck in their future endeavours (oh, and to have their desk cleared by lunchtime). The European method is more circuitous. Companies wanting to enact mass lay-offs typically start with consultations with unions, representatives of which sit on companies’ boards in Germany. A plan social is drafted. Strikes inevitably ensue. Politicians get involved, and badger the employer into firing fewer people than it had originally planned, or to pay for its soon-to-be-ex staff to be retrained. The full cost of downsizing is only known once labour courts are called to rule on the matter, years later. Meanwhile the company in question often cannot hire more employees lest it be made to hire those who were just let go.
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This article appeared in the Europe section of the print edition under the headline “How to crush innovation”

From the October 4th 2025 edition
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