Money has always influenced work environment and relationships. The Euro zone was in recession in the first quarter of 2012 and the second looks like the same.
As a consequence of the economic crisis, the unemployment rate in the Euro zone grew to 10.8% in February 2012 (source: Eurostat) and has gone upward every month since August of last year, thus reaching a new record high for the Euro area.
A third of Italians and Portuguese under age 25 are without work and over half of those under 25 in Greece and Spain are jobless.
There are no better conditions on the horizon. Most of labor reforms now taking place in the European countries, especially in those where social policy plays a greater role, are mainly centered in admitting layoffs in case of companies’ substantial economic turmoil. Money was invented to improve our barter system – as Valery Satterwhite reminds us in her article, “Money Matters” – but it seems now more able to separate people rather than unite them. Soaring unemployment will bring unit labor costs down to bottom line levels.
The general and well-accepted dogma in recent years has been that, in order to be competitive, you need to keep labor costs down and to be lean.
But too much cost-cutting, fewer fulltime workers, and reduced investment in training turns out to be a bad strategy for businesses.
A study by Zeynep Ton, an MIT professor, on four low-price retailers which, by contrast, applied an opposite policy, showed that they were more profitable than most of their competitors and that they have generated more sales for employees.
It is true that being lean is a good business tactic, but the obsession with cost-cutting can create a negative spiral. Money, however, can also influence business relationships. Because money does not drive morals, as writer Brent Lang suggests, the “profitable at any price” philosophy tends to find a way around moral boundaries.
This is evident not only through corruptive approaches – see our N. 7 issue – but also because financial income can be the outcome of criminal activities. The SWIFT Agreement between the EU and the US, for example, gives US authorities access to European bank data transferred via SWIFT, for terrorist finance-tracking program purposes.
Criminal prevention requires more control over people’s activities: each of us becomes a suspect to be monitored.
This may raise concerns that protection of personal data for law enforcement matters may end up being inadequate. Similarly, in Europe, the third Money Laundering Directive (2005/60/EC) – the review of which is expected this year – has translated into law the standard policies to combat money laundering.
The implementation of this and similar legal instruments – such as those in the field of “law enforcement” – puts individual fundamental rights under pressure.