Paris, Wednesday, July 12, 2000 For Greenspan, Ease in Firing Is a U.S. Plus
WASHINGTON - U.S. companies are getting more out of the high-tech revolution than are their counterparts in Japan and Europe, largely because it is less costly for U.S. employers to fire workers, the chairman of the Federal Reserve Board, Alan Greenspan, said Tuesday. Addressing a convention of state governors in Pennsylvania, Mr. Greenspan also warned that it still was not clear whether the U.S. productivity gains driven by information technology would be sustainable.
Japan and Europe have made computer-based gains in processing and transmitting information, but the gains there have not been as substantial as those in the United States, he said.
''The relatively inflexible and, hence, more costly labor markets of these economies appear to be a significant part of the explanation,'' he said. ''Because our costs of dismissing workers are lower, the potential costs of hiring and the risks associated with expanding employment are less.''
Mr. Greenspan's observations reflected the widely held view by U.S. officials and the International Monetary Fund that Europe must liberalize its labor markets to make it easier, and less expensive, for employers to fire and hire.
European leaders, particularly in France, have bristled at the advice, insisting that their labor laws and benefits are guarantees of a cohesive and humane society.