WHAT AMERICA'S LABOR LAWS can teach Europe can be summarized in one word: flexibility. Or two: rigidity kills. Or three: USA is leading. Or four: Europe is losing badly. Or a few more if you read this superb article by Diana Furchtgott-Roth originally appeared in the Financial Times:

Over the past decade, European employment has grown by less than 10 per cent, while US employment has grown by 17 per cent, creating more than 2.2m jobs last year alone.

US figures last Friday showed continued growth in employment, with 207,000 payroll jobs created in July. The increase in payroll jobs for May and June went from a total of 250,000 to 292,000. The unemployment rate remained at a low 5 per cent, and an additional 450,000 people moved into the workforce. With such positive data, the US Federal Reserve will continue to gradually increase interest rates.

America grows while Europe stalls for many reasons, among them disparities in flexibility caused by employment laws. Europe will never recover until employment protection statutes are modernised and politicians restore flexibility to employers and workers.

The unsung story behind US job creation is the flexibility and turnover in American labour markets, which boost employment. Frequent job changes lead to better job matches and higher productivity. In 2004 there were 54m new hires and 51m job separations in a labour force of 147m. Over half these separations were voluntary - people who left jobs because of better opportunities. Younger baby boomers, born in 1957-1964, held an average of 9.6 jobs from age 18 to 36. This turnover is a leading cause of job creation.

Read the rest (barretina tip: blog in Spanish HispaLibertas)

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