Evaluate Labor Law: Dismissal Rules

Abstract

Since the early ‘90s of the last century, there has been a growing tendency, in discussions over economic policy, to quantify employment protection systems (EPS). The translation of institutional data into numerical indicators fulfils, as it were, two scopes: the first is to resolve through field studies those shop-worn controversies over the impact of EPS on the performance of an economic system; the second is to render numerical indexes instrumental to policy-making by enabling international comparisons and allowing identification of institutions that supposedly cause a rigidity of a specific labor market, with a view to changing them. In 1999, the OECD elaborated an index of employment protection systems that proved a significant step forward compared with the previous standards, as the next paragraph makes clear. Unquestionably, the OECD index has been the most widely used since its first release. In November 2003, a small group of lawyers and economists of the Bocconi University, including the author of these notes, wrote a paper aiming to analyze the method used to build the index and underscore some of the issues it raises, specifically in Italy, but we think more broadly speaking (Del Conte M., Devillanova C., Liebman S., Morelli S., 2004, on www.SSRN.com). The analysis high lightened the extreme variability of the index, inasmuch as its standards are subject to decisions at times arbitrary and to interpretations at times questionable. We also expressed some reservations as to the opportunity of merging partial indexes to generate a single index of global rigidity. Leaving to the reading of the original study in order to analyze the technical criticism we raised to the OECD index, this new paper summarizes a set of issues which, in our opinion, are preliminary to any dialogue between legal scholars and economists on the topic of the different models to regulate flexibility in the employment of labor force. Its main point is to stress that any realistic analysis of employment protection systems in a diversity of countries must proceed by examining institutional provisions according to the principles of methodology of comparative law. And this implies, among other things, that comparison of legislative systems may and must be conducted outside any concern for their possible measurement by index. Indeed, quantitative measurement - howsoever arrived at - of formal elements extrapolated from legislative provisions not only is technically fallacious, but is also uncharacteristically constraining, it being very much a self-fulfilling prophecy inspired by ulterior motives.