Saturday, December 16, 2006

Right is Left

A wise guy's always right. Even when he's wrong, he's right.
- "Lefty Two Guns" Ruggiero

Unless successful business means wasting money, the top-three nightmares of your average Romanian company (and my daily job pesters) are by far:

3. Corruption
2. Social Taxes
1. Labor Code

Oh the Labor Code... In a country where less than two years ago the so-called "Right" came to power, one may have expected heavily-Socialistic laws to die vertiginously buried in amedments and abrogations.

Not the Labor Code. It is by far the single, most leftist element of the Romanian civil law; it sends chills down employers' spines and builds invisible Lenin-like statues to the wonder of it all, the one and only worthy product of a civilized society, the pinnacle of existence, the almighty social warrior - the Employee.

Decreasing but existent corruption and humongous social taxes are a strong deterrent to prevent investment. For a given net salary, an employer has to pay about 80% more in taxes; that means the cost of hiring someone for EUR 1500 net is actually EUR 2700. No wonder salaries stay low. Nevertheless, investors keep showing up motivated by recently-decreased income taxes (from about 70% to 50%), high-profile anti-corruption cases and the land of opportunity that is 21st century Romania. Until the gold runs out, that is.

While fiscal laws and EU-induced regulations are slowly but steadily steering the legal system away from the Communist path, the Labor Code and employment law in general show no signs of change. How is it possible, I ask, that in a country where the Liberal party took over the government on anti-Communist speeches and where the Right is supposably leading the country, a law recently passed (2003) so heavily favors the employee?! Just a few examples:

- overtime is limited to 8 hours a week, except for specific cases (legal field not an exception, of course);
- remaining vacation days cannot be reimbursed, nor do they roll over; it's an inviolable right that cannot be renounced unless you quit (and I thought only the French believed in the God-given right to relax);
- as an employee, you can pretty much break an employment contract anytime you wish, pending 15-day notice;
- determined contracts are just a capitalistic invention meant to trap the helpless employee, therefore all contracts are undetermined, with minor and almost impossible exceptions;
- you cannot fire your employees unless extensive anti-disciplinary investigation is carried through;
... and so on.

I cannot but conclude that as a foreign investor I would think twice about opening up a branch in Romania. Maybe the low salaries and the sharp minds are worth the trouble; maybe there are poor employees that need protection. But a government that sustains anti-capitalism laws and builds its policies on pro-capitalism speeches is all talk, no action. Admittedly, here I favor the "Right" more than the "Left"; honestly though, there is no true Right. It's at most a Center-Left government with delusions of liberalism. The Right is Left in as much as the Left is Communist.

In the U.S. I would disagree with Donnie Brasco's "Lefty Two Guns"; but in Romania, I concur: A wise guy's always right. Even when he's wrong, he's right.


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