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Wednesday, October 7, 2015

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A Jewish approach to job cuts

Tags: Columnists

Competition is the lifeblood of capitalism. It’s why countries negotiate free trade agreements, to remove artificial barriers to competition. These benefit the many, but there are always some people who are adversely affected, at least initially. Competition forces companies to become more efficient, yet such efficiency inevitably leads to job losses. While this may be the best economic approach, economic policy is only one of many factors that must be considered.

The Royal Bank was recently accused of firing 45 Canadian workers and replacing them with foreign workers. The bank denied this, noting that they were a supplier’s employees. Instead of debating semantics as to whether the bank technically fired workers, and ignoring the political rhetoric, it behooves us to examine the issue of employment equity.

A similar issue has arisen with the Israeli government’s announcement of its intent to pursue an “open skies” agreement with European airlines, something the government says will lower prices and boost tourism. The response has been a strike by the Israeli airlines and a threat by the Histadrut, the labour federation of Israel, to close down all air travel to and from Israel.

While balancing competing interests is never simple, some basic guidelines can help. Economist Milton Friedman famously pointed out that “the business of business is business,” but Judaism sees business as a means to an end. It’s the mechanism by which we’re able to lead a moral life – self-supporting, helping others and partnering with God in the ongoing process of creation.

As a starting point, one should try to conduct business with those closest to us, with fellow Jews, and, presumably, one should buy a Canadian product before a foreign one. However, this applies only when doing so doesn’t cause a financial loss, though it would seem a small loss is a fair price to pay for supporting those who share our values.

A company is well within its rights to try to increase profit, though here, too, profit is just one function, if admittedly the major one, of the many functions of a firm. It’s difficult to know where to draw the line, but it appears reasonable that a company that’s making money in line with its competitors should not replace workers just to make extra profit. However, if a division is losing money, it would be appropriate. Thus the approach of the Royal Bank to find other jobs for the affected workers seems reasonable, even if the new jobs aren’t exactly the same and come a slight pay cut.

Governments must take a wider view, and any decision they make will affect many people. Clearly the role of government is to make decisions that benefit society as a whole and not back down in the face of industry pressure or lobbyists whose concern is the welfare of the few instead of the many. Unfortunately this is a task most governments have failed at, which goes a long way to explaining the financial crisis, especially in Europe.

“Open skies” is hopefully the first of many initiatives the new Israeli government will take that will benefit Israeli society as a whole.

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