Protected but Unemployed?
28 March, 2013
Protected but  Unemployed?
The underway draft labor code lacks clarification that may lead to increased unemployment rate, shadow contracts and deteriorated investment climate, Association of Young Economist of Georgia (AYEG) warns and hopes the law-makers will streamline the defects.
If currently valid labor code is notorious for its super-libertarian approach, more focused on employers than on employee’s interests, the underway draft labor code, which is expected to become a law by end of this spring, lacks transparent and detailed paragraphs that lays ground
to double interpretation and destroys the interest balance between employers and employees. The state comes to protect interest of employees who have to agree on bondage employment terms and to prevent discrimination of labor force new draft code enhances social responsibilities of employers but does not provide with detailed description of these obligations that puts out hidden bombs. For example employers should insure better working conditions the draft says but says nothing of how exactly the conditions should be improved that may trigger a dispute between the employer and employee eventually.
Employers have to pay diligently each month for both regular and temporary workers including students on practice. Meantime no temporary contract can be of less than three-month-period-long. Giorgi Tsimintia, Chairperson of Board of AYEG, finds this obligation losing for both employers and potential labor force. He fears that obligation on three-month-long temporary contracts may really puzzle an employer if he/she needs implementation of only 10-days work for instance. The way-out can be a shadow contract or saying “no” to a person for a temporary job. Requirement on monthly payment seems also unreasonable.
“Why should an employer pay each month for a three-month temporary job when he/she can agree with the employee to pay after the work is completed. Maybe after three months the employer finds the job is done far below the par what should it pay for?” Tsimintia wonders. Obligation to pay for temporarily hired people deprives undergraduate students and inexperienced people of opportunities to improve qualification by temporary work at enterprises. Some Georgian banks for example largely used the practice of suggesting temporary training to students sometimes with job opportunity. Some paid for this, some did not. But the targeted people were interested in it as they had an opportunity to improve skills and CV that increased their chances to find a job. Now business will give up this practice. This is a brief part of the rap-sheet of the new labor code draft that all in all can really insure better protection of employees but on the other hand will lead to reduced employment rate and shadow deals and the potential employee will be a victim in fact.
“In most cases paragraphs [in draft labor code] are so superficial and unclearly elaborating the required terms, criteria and obligations that in practice this kind of non-transparency will unreasonably tighten burden on employers. The latter may get bored and practice informal contracts that will trigger income tax-evasion or will reduce employment,” he said. “As a result employees may be better protected but people at large will be less employed. Therefore it is important to law to provide with full details and description of obligations they impose on employers and employees to escape disputes.”
Sophisticated labor code and complicated business procedures may scare investors off. “Labor law is not the decisive but one of major factors to investors when they evaluate the country’s investment potential and unclear obligations may scare some people,” Tsimintia said adding that the underway draft needs harder work to become perfect. He thinks the reason the project is superficial is that authors worked it out in a prompted manner and without inclusion experts and interested sides. The working on the project started in this past January. In February government approved the paper-work and scheduled it to be approved during the parliament’s spring session. Now it’s up to the legislative body to say a final word and make the labor law flawless.
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