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Posts Tagged ‘labor market policy’

An interesting article analyzing the economic tsunami Iceland is currently going through argues that apart from the obvious lack of adequate regulation and dubious nominations of politicians with no economic experience (the governor of the Central Bank is a poet), Iceland’s industry failed to adapt to changes stemming from its rapid growth.

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The economic crisis has led to calls for the government to encourage employers not to fire their workers. However, this policy may perpetuate non-competitive factories and industries at a high cost.

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The strike by “Pri Hagalil” workers and remarks such as “if the factory shuts down, I have no future” or “this factory is my life” reminded me of an important principle of labor market policy we learned from the World Bank’s Growth Report. The principle – protecting people, not jobs.

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