Blood, Sweat, Toil and Tears

There has been a steady drumbeat of bad news on the job front in Europe. Just last month, the Swiss engineering firm ABB announced 12,000 layoffs, 8% of the company's workforce. Infineon, Europe's second-largest chipmaker, said it is downsizing 5,000 workers because of a slowdown in the electronics sector. Ericsson, Sweden's big telecom equipment provider, said it would stop making mobile phones — a decision that will put 2,600 out of work in southern Sweden. In fact, in just a single week in late July, European companies announced a total of 30,000 layoffs. Stock markets across the Continent may cheer the restructuring measures because companies need to slim down for leaner times. But what happens to the workers after they have been cut adrift from their jobs? How generous are their redundancy packages, how do they go about finding new jobs — and what if they can't? And how do countries, and companies, find the right balance between being compassionate to their workers and competitive in the global economy? Looking at how being laid off has affected workers in four key European countries may provide some of the answers.

Take Abdul Aziz Masifi, who emigrated from Iraqi Kurdistan to Sweden eight years ago. Masifi, 33, had been working as a machine operator at Ericsson's mobile systems unit in the Stockholm suburb of Kista for the past three years. Last month Masifi, who earned $1,700 a month with overtime, was called in to his supervisor's office and told that he was among 225 employees in his department being laid off. "I was a bit shocked, but I believe that God has a purpose in everything," said Masifi, who is married with a young child.

In Masifi's case God — and the government — will provide. In Sweden, employees who lose their jobs are cocooned from many of the harsh realities of unemployment, at least initially. Jobless workers get 300 days of benefits, or about 14 months of five-day weeks, which can be extended to 600 days if some activity like vocational retraining is involved. Maximum unemployment pay has just been increased from $1,189 to nearly $1,400 a month.

But benefits don't stop there for Masifi and his former colleagues. Ericsson designed a special severance formula that pays this group of dismissed workers up to a year's salary regardless of how long they had been employed. For Masifi, that works out to four months' severance pay for every year in the job. In addition, these employees can be transferred to an outplacement firm called Proffice that provides each worker with an analysis of his skills and helps organize retraining if necessary. Dismissed employees joining the plan have to show up every morning just as if they still had jobs. Ulf Westergren, director of production support at Ericsson, says that among other benefits the outplacement system helps dispel the depression that often comes with job loss.

Masifi has decided he wants to be a bus driver, which pays roughly the same salary as his Ericsson job. So he will take a course, arranged by the outplacement program, to get a bus driver's license. "I think it's a good deal," he says of the severance plan. "It's a safety net."

In Sweden there can even be a safety net for those who have not been laid off but just find it difficult to find a job. For example, Camilla Zadruzny, 36, has been unemployed since 1999, when she left work at a nursing home to have a fourth child. "If you have four kids, employers aren't interested because they think kids will be sick and you'll be home from work," she says. Even though her conventional unemployment benefits have expired, Zadruzny collects a $670 monthly study grant, a $250 rent grant and $520 in state child support.

Sweden has one of the lowest unemployment rates in the developed world at 4.2%, down from 8% only three years ago. But manufacturing jobs are fast disappearing because it is vastly cheaper to produce equipment like telephone handsets in Asia, says Jan Grönlund, state secretary in the Ministry of Industry, Employment and Communications. "We can't compete as a low-cost country," partly because social costs — including taxes and other company outlays for the unemployed — are so high.

Even though the French government is using its best rhetoric to discourage layoffs — threatening to forbid them in profitable companies, for example — jobs in France are also disappearing. Alcatel, the big French telecom firm, announced that it will close all but 12 of its 120 manufacturing plants worldwide. Food giant Danone said it was laying off 570 people, while Marks & Spencer, the British department store giant, initially announced it would eliminate 1,700 jobs in France as part of a decision to close all of its stores on the Continent. Now the firm says it may try to find a buyer for its French operations as a last-ditch attempt to save those positions.

Yolaine Belamire, 49, has worked since 1979 at the Marks & Spencer flagship store in Paris, starting out as a clerk and working her way up to manager, where she earned $1,770 a month. "We thought the cutbacks would affect smaller stores in the provinces," Belamire says. "When it was announced that it was all the stores, it was really a shock." Employees filed a lawsuit against Marks & Spencer, claiming that they received insufficient notice of dismissal and also that the company violated French workplace law by notifying them by e-mail, rather than in a staff meeting. "At 49 years old, it's hard to find anything on the job market," says Belamire. "I'll never find another job like this with the same salary."

If the store closures go through, what Belamire will get in unemployment benefits is 57.4% of that salary, which decreases about 15% every six months for a maximum of 30 months. That's the formula for anyone dismissed who had been employed for 14 months out of the previous 24. Belamire is also likely to receive some kind of redundancy package from Marks & Spencer once all the suits are settled.

Coming just a year before presidential elections in France, the waves of layoffs have trade unions and politicians trying their best to turn them back. When French appliance maker Moulinex-Brandt tried to eliminate 670 jobs at a factory in Lesquin in northern France last month, the regional director of labor found the company's restructuring plan inadequate and ordered the firm to restart negotiations with the union. Prime Minister Lionel Jospin, who seems likely to join the presidential race, has been pushing "social modernization" legislation that would make it more difficult for companies to lay off workers. Not surprisingly, big business has heatedly opposed the proposal. "If firing becomes impossible, hiring will become more difficult," says Ernest-Antoine Seillière, head of the French employers' association, MEDEF.