(I originally wrote the some time ago – but it seems pertinent today.)
The Greens show their excellent understanding of business.
Currently if a company is struggling financially there are three groups of people who are likely to suffer; the company’s customers, the company’s investors and the company’s workers. Customers are normally in the best position as, unless they are dealing with a monopoly of sorts, at least they can take their custom elsewhere. The investors face a risk if they stick with a struggling company, but they also normally have the liquidity to escape quickly and invest their money elsewhere if they need to. In fact if anything investors have the most potential to exacerbate a situation for struggling businesses if they get too speculative and short term in their investments.
Workers on the other hand cannot easily transfer their loyalty from one company to another….
So someone who has sunk their entire life savings into a small/medium business (which is the most common business in NZ) can just walk away?!?
What planet do these people live on. How exactly do you sell a stake in a private business that’s failing? Answer: either you sell for a discount, or you don’t at all.
The reality is the opposite of the Greens’ claim – workers can easily walk away and find another job (although that depends on the job market) while investors are often left broken and penniless, long since trapped into a failing business.
Even in the share market, where liquidity is never a problem, you will not get your money back from a failing business. Think Feltex – as soon as the owners knew their business was in bad shape, the price nose dived, and thousands of people lost money. Many ended up with shares that were totally worthless, the share price bouncing from 1c to 2c and back again (and yes, some speculators did make money on that, or at least tried to) for shares that had previously been worth many many times that.
I recently heard a speech from a man who was retiring with what was rumored to be a $10m+ sale of his company. He described the risks that were undertaken by those starting the company. He explained that several of those who started the company could easily have gone into retirement flat broke. Yet, there was never the slightest chance that that might happen to any employee.
Finding a new job can be a months long project in good economic times and nigh on impossible in a local economy as that economy tightens and a major employer like PPCS, Fisher & Paykel or Carter Holt Harvey announces mass redundancies. And the consequences for workers who lose their jobs are on average far more significant to them and their families and communities than they are to the customers and investors of that same company.
While finding a new job can be hard during a time of mass redundancies, it is not impossible. It seems to me that we’re being told that any worker being kicked out of a job is always going to result in a months-long crisis. That’s simply not the case.
If employment laws are about ensuring fair outcomes and protecting those exposed to unfair risk, then redundancy is a crucial area to examine. Because that is when workers (as well as investors) are most exposed to risk. At the moment it doesn’t seem fair that everybody can potentially flee the scene of the crash except the workers who have the most at risk.
Yea, because while the owners take off and start another business, the workers are kept behind to take care of the paperwork and lawsuits. Or is it the other way around, that the workers go out and get another job and the owners….
I’ve never thought of it as a risk that my employer might stop paying me, because I can go out and get a job.
But I’ve always considered risk in starting or buying into any business, because I might loose what I invest.
Now, much of what the Greens say might be true, in some cases. But in the cases of most small businesses, those affected by today’s law change, it’s totally off base.