As noted with the Rigidity of Employment index, the ability of companies to flexibly manage their workforce and quickly hire and lay-off employees is an important factor in general business competitiveness. Summarized below is the average cost in weekly salary for a company to lay-off or make and employee redundant. The higher the cost the more an outsourcing provider will need to charge for providing workforce flexibility to its clients.

The countries with the lowest costs of redundancy are the United States, Jordan and Romania.  Most of the Eastern European countries are in the upper half with relatively low costs of redundancy. India, China and the Philippines are all in the bottom half and have higher than average costs to lay-off an employee.

Data is sourced from the annual Doing Business survey copublished by the World Bank, IFC and Palgrave MacMillan. The redundancy cost indicator measures the cost of advance notice requirements, severance payments and penalties due when terminating a redundant worker, expressed in weeks of salary. If the redundancy cost adds up to 8 or fewer weeks of salary and the worker can benefit from unemployment protection, a score of 0 is assigned for the purposes of calculating the aggregate ease of doing business ranking.