Friday, September 1, 2017

When that super expensive worker costs less than the fuel for a truck

In every election cycle and with every annual report by economics think tanks, someone is bound to complain about the high cost of labor.

For German workers, this has meant various measures aimed at making the labor market more competitive and cutting costs. The traditional 50/50 split of payroll taxes and was abolished with the result of shifting costs to workers; a pre-tax regime for social security contributions was introduced concurrently with income tax on all retirement income, and companies were offered generous subsidies for hiring long term unemployed.

All of this led to a small reduction of the unemployment figures projected by economists some 40 years ago. In other words, demographics is a bitch, and automation and productivity gains are the whips.

The other day at a gas station, the blogster saw a truck driver pay just under 600 Euros for diesel.

"I use about one thousand Euros worth of fuel a week", explained one driver.

Sheepishly, the blogster said: "So, you burn more in fuel than you make in wages?"

"For sure", the driver replied.

"And your boss still complains about high labor cost?"

"No, our company owner doesn't. We have five drivers, and the government pays half of the wages for three of them."

"What?"

"Yes, the boss is an expert at finding government subsidy programs", he smiled.

As the truck driver went back to his job of supporting the booming German economy, the blogster absentmindedly paid for the four-pack of butane cartridges needed for an upcoming short camping trip.

It* will carefully look at industries and sectors next time someone complains about excessive labor costs.

* Quality gender neutral reporting.

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