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  • Mathieu Provencher

Domestic violence and business


(picture from Wix's library)

Hi everyone! There are many ways to approach this topic, for example from the point of view of the impact of violence at home on productivity, on school results, and on absenteeism, amongst others.

I’m going to focus on a recent debate regarding a Peruvian law that would force employers to give facilities to employees (mostly female I assume) that are victims of violent abuses from their household.

These provisions offer victims immunity from being fired if their performance is affected by domestic violence, the right to ask to be relocated to different sites or different schedules without any financial penalty (based on these same concerns), the right to miss up to five days a month of work (up to fifteen days in six months), and finally the right to leave work up to five months (without pay) and come back to the same conditions they had when they left.

These new provisions aim at protecting individuals (again most probably women) from being discriminated further when they are victim of domestic violence. It seems very obvious to me that such people are under enough suffering as it is and they don’t need to worry about losing their job on top of the fear they have at home. Most of you that know me should be aware that I have no respect for machoism and sexism.

OK! This being said, let me put my Economist hat… which means that I will now become a-moral (not necessarily immoral, that’s different).

SO, the idea is to protect vulnerable individuals from the spillovers their situation can have on their professional life. I think everyone will agree that domestic violence can have a negative impact on a person’s performance at work, which can then lead to that person losing his or her job. This new effort from the government of Peru tries to remedy that.

Now here’s the catch! In Economics we say there are perverse incentives when a policy, for example, leads to results opposite to what was expected. Even better, a policy can influence actions (because of its incentives) that are opposite to what it was trying to do. In other words, instead of pushing people in the “right” direction, the policy could make things even worst and push them even further in the “wrong” direction… that’s what perverse incentives are.

The piece of legislation I just talked about definitely has high risks of perverse incentives. The intention is to protect these vulnerable individuals from discrimination at work. The result may very well be to increase discrimination, and not only to these victims of domestic violence but to women in general! If that would happen, the whole situation would end up being much worse than what it was before the policy… don’t worry it would not be the first nor the last time this happens, governments seem to fail a lot more than they succeed.

Here's how that may work out: Peruvians live in a society in which men seem more likely to display machoism than in other parts of the world I have visited. This is a relatively strong patriarchal society (although women have a very important role in a number of areas), which is why I focused quite a few times on the idea that women will probably be the “beneficiaries” of that policy. In a completely sex-egalitarian society, you could expect that men and women are equally victims of domestic violence… which is most probably not the case here. Unfortunately, what matters here are not the facts (which I would love any of you to prove me wrong) but the perception of the facts. Employers will expect (rightly or wrongly) that women will be the main group that claim these benefits.

All right, this first argument being done, let’s move to the meat of my analysis: costs. Having to keep unproductive employees cost money, having to relocate or reschedule employees cost money, having employees lose days of work cost money… do you guys see a pattern?

If this legislation becomes known enough and if enough people start asking for its protection, employers will react. Note here that I said ‘employers’ will react, not abusive husbands, or fathers, or brothers, or whoever else. Women (and men) will continue to suffer from domestic abuse, absolutely nothing changed for those that mistreat them, their incentives to beat and shout and torture have not changed. The incentives of those that employ these victims, however, have changed greatly.

Each person from that vulnerable group has a probability attached to them now, a probability of costing a lot more and not being able to get rid of that cost. A substantial amount of firms faced with such odds will most likely want to mitigate that risk… but how? They arguably cannot change the law, they could go more informal (or stay as informal as they are) but there’s always a risk that they can get reported, or they can hire as few as possible of that risk group… which is what tends to happen in these cases.

Unfortunately, a good number of experiences from other countries (France being one of them) show that when firms are unable to fire underperforming or costly groups, they don’t hire them at all in the first place. I see the risk that this policy aiming to protect vulnerable groups (women in this case) will end up making it much more difficult for these groups to find financial independence, particularly in the formal market (which is what they need since it gives health insurance and retirement funds for example). It will deprive them from the chance to get out of their abusive homes for work and build a life for their own dreams (or perhaps to gain some level of influence and respect in their household).

If this gloomy prediction sees the day, not only will these domestic violence victims not be helped but a much larger group, working women, will be hindered even more than they already are.

What needs to change is this culture of machoism and this lack of trust and compassion between citizens. THAT will reduce domestic violence, not penalizing women for being in an already discriminating culture.

Keep yourselves informed guys, it matters!

#Violence #BehaviouralEconomics #Microeconomics #Costs #Jobs

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