The relationship between business growth and employment law is symbiotic and a progressive employment law supports business growth and innovation. Employment law in the United States supports business by outlawing discrimination on the basis of race, ethnicity, national origin, sexual identity, age, and other factors. The situation in many emerging economies, such as the Arab region. is different.
Strategy Surgery and Consulting has done fieldwork in two Arab countries and realized that age and degrees are factors companies or employers can use, sometimes publicly, to reduce expenses because of the “risk” that an employee is or may be over-qualified. Businesses in many Arab countries impose an age limit to contain or delimit salary ranges because they correlate age with marriage, a factor that can lead to higher salaries for married employees. Businesses also are sometimes weary of those with advanced degrees, as opposed to a candidate having only a Bachelor’s degree, because of the risk of paying higher salaries and / or benefits.
The net effect is that two factors affect the recruitment process in many Arab countries:
- Age
- Education
They can seriously affect a company’s performance, any innovation potential it may have, and strategic planning. Because of such legal, if not also ethical, “blind spots,” companies in many Arab countries would handcuff their own ability to implement or use the latest knowledge or best practices (in the name of “fresh graduates”), find the best talent for their jobs, and strategically plan. One seeming exception in employment law is Saudi Arabia, a country with a highly competitive business environment as of 2024. It has outlawed discrimination based on age. Other Arab countries have no such laws or applicants are not aware of them, or do not pursue their employment rights.
Thus, reforms in the legal system and doctrine can bolster productivity and directly affect companies’ potential to drive more sales, experiment with organizational innovation pre-conditions, and implement progressive policies. Even if the law does prohibit age and / or marital status discrimination, it still happens in companies. Saudi Arabia has progressed in its labor law.
Yet another issue that can affect employees in companies is what may be “predatory” clauses, such as requiring a penalty payment for ending a fixed-term employment contract. Such a clause can undermine any trust between an employer and employee and cause the employee to be insecure and not deliver their best.
The relationship between law labor and business performance comes into high contrast once we compare the United States or Britain, as two leading Western economies, with many Arab countries. Pinpointing low sales, average or below average productivity, and a company that might take too long to implement decisions on the business environment is not enough: The age, education attainment of employees, and a company’s willingness to hire those whom it may deem “old” directly affect its strategy and business potential.
Companies can make significant advancements when business or employment law supports them. Employment law is not simply for stipulating compensation, the employer’s rights, and employees’ benefits and obligations. Companies can reap many benefits from building a mutually beneficial relationship with their employees, beyond simply paid leave days. An employment contract is the legal, if not also ethical, blueprint of the relationship between a company and its employees. How a company treats its contracts and whether and how it revises them can speak volumes about how it perceives its employees and their value to it. Business and strategy consulting encompass more than sales, human resources, and the C-Suite.
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