One employee's loss is another employee's gain

Preventing unfair dismissals is invoked as much against workers as it’s invoked in their favour. In defending a worker’s right against unfair dismissal we’re undermining another worker’s opportunity to have the same job. Why take sides?

Let’s look a little further. When someone is dismissed, an employed person becomes unemployed at least for a while. Even if his job is taken by an employed person moving from another job, another job vacancy is created. So following the chain back far enough, someone who’s unemployed is ultimately drawn into a job.

Thus, as we wait while growth generates more jobs to reduce unemployment, “churning” between jobs and unemployment is very valuable. It keeps unemployed people in touch with the labour market.

As long-term unemployed people lose touch with the labour market, their self-esteem falls and their job skills atrophy. So does the network of contacts which could help them find another job. And they face rising discrimination from bosses wondering why they’ve been out of work so long.

It’s like the argument for tariffs. Tariffs look good at first glance. But not when you keep looking. Tariffs create jobs. But it turns out that they also destroy them - and if you examine both sides of the ledger they usually do more harm than good.

Rules against unfair dismissal help some people stay in jobs where (rightly or no) the boss wants them gone. But their protection comes ultimately from excluding others from the same job who need the job at least as much.