Unfair Practices That Feed On Unemployment

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A business idiom says that every circumstance may be turned to one’s advantage. High unemployment rates are no exception. The following overview describes unfair, though commonplace, practices that feed off of high unemployment and may also cause it to enter into a vicious circle. Beware of them during your next job interview.

Nightmares that Repeat Again and Again

Fixed term employment contracts represent another Achilles heel in the employment system. After a fixed term employment contract expires, an employee is automatically dismissed, without being given any reasons or given a notice period. The employers sometimes keep renewing fixed term contracts many times – always for three months or less. This gives them the option of practically and smoothly firing an employee at any convenient time. The employee never knows whether he will still be employed in a month or two. Fixed term contracts are popular in times of crisis when companies face uncertainty; the expiration of those contracts may suddenly generate thousands of unemployed.

The best way to supress this practice is to emphasize that having a permanent, fully trained employee is in the long term better that recruiting a newbie and releasing him several times. Fixed term contracts are also usually regulated by law. For example in the UK, they may be renewed just for 4 years, after that they automatically convert to employment contracts for an indefinite period. And after the initial two years the employee is entitled to be told the reasons if the employer does not extend the contract.

Sole Proprietorship instead of Employment

Having employees is costly for companies; it is often necessary to pay taxes and insurance for them as well as to give them compensation when they fall ill or get injured. Hiring a sole proprietor is more convenient, since she/he pays all taxes and insurance independently and shoulders all business risk. Terminating cooperation with a sole proprietor is easy, while an employee usually must get a notice period or special protection. So why not to hire a sole proprietor instead of recruiting an employee? Or what about forcing an employee to get a licence for a sole proprietorship? High unemployment rates supply a lot of volunteers who would agree to this deal. Such practices may be quite tolerated in some countries like the UK, while they are illegal in Germany or the Czech Republic. German employees are entitled to protection, which may not be bypassed by hiring them as sole proprietors. Therefore the law provides that the sole proprietors have to be really independent – they cannot get fixed working hours and they are also not allowed to earn more than a certain amount of rewards from one company in one year.

Slavery in the 21st century 

Slavery was banned long ago, at the Congress of Vienna in 1815. In spite of this, it survives in new forms all over the world. The pattern is usually similar. Unemployed victims get an offer to work in a foreign country for a reasonably high salary. After arriving in the new country, they are deprived of their passports and forced to work for low wages or none at all. Cases have been reported in which unemployed female graduates from Eastern and Central Europe were told they could spend their “last holiday” working in Greece or Italy as waitresses or hostesses in a beach resort. Once they reached their destination, their hosts confiscated their cell phones, took them to clandestine brothels and forced them to pole-dance or become prostitutes. If they had refused, they would not have been given any money for their journey home.

An even more striking case happened recently in the Czech Republic. A gang targeted unemployed Vietnamese migrants, who were granted temporary visas. The gang offered them alleged employment contracts, written in Czech, which the Vietnamese could not understand. Consequently the migrants were transported to forested areas and forced to work as woodcutters. After several months, the migrants were dispensed with, without being paid anything. They were afraid to contact the police, since their visas had expired and they could be transferred back to Vietnam.

The Dollar Pharaohs of the Pyramid Scheme

A pyramid scheme is a business practice in which the profit of a participant is determined mainly by whether he or she brings in other participants. The real

masterpiece of this activity was led by Ulrich Felix Anton Engler, a German entrepreneur who managed to earn more than $100 million with a deceptive pyramid scheme. His clients were told to invest with him and promised profits in return for finding and persuading other new clients to invest. The more new clients came, the greater the profit promised to the one who had brought them in. In reality, the participants earned very little, while most of the cash ended up at the top of the pyramid – in the hands of Mr. Engler. After years of hiding in the US, Mr. Engler ended up in jail. However, his followers found many ways to avoid the same misfortune by disguising the pyramid scheme. Today, the victims of a pyramid scheme might be persuaded to buy e.g. a pot or a book at an irrationally high price. They are told that they will get 5% of its price for finding each new victim willing to buy the same rubbish and 3% for every person that the new victim finds, etc. The real profitability equals zero. Nevertheless, the unemployed are an extremely tempting target group for plotters of pyramid schemes. They are eager to find basically any job and like to hear that no special education or skills are required for dragging others into the business. They also usually know other unemployed people who could be brought in. As a result, they get caught by looking for other victims instead of looking for a legitimate job. Around ninety five percent of participants give up after several weeks, still unemployed, without money and with another painful experience under their belts.

This overview of unfair practices could sadly continue e.g. with misusing governmental contributions to protected employee positions, or overloading the existing staff in order to avoid new recruiting. The good news for the unemployed as well as mistreated employees is that the Internet and social media facilitate experience sharing, people gathering and organizing collective actions. In the end, Facebook and public awareness could become more effective tools of regulation than any of the statutory legal provisions.

This article was originally published in Youth Time print edition, 31th issue. Click here to check the content of the issue, subscribe here, purchase one issue here.

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