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Macroeconomic Implications of the German Short‐time Work Policy during the Great Recession
Author(s) -
HerzogStein Alexander,
Horn Gustav A.,
Stein Ulrike
Publication year - 2013
Publication title -
global policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.602
H-Index - 33
eISSN - 1758-5899
pISSN - 1758-5880
DOI - 10.1111/1758-5899.12054
Subject(s) - overtime , german , recession , working time , flexibility (engineering) , economics , core (optical fiber) , panacea (medicine) , work (physics) , labour economics , temporary work , global recession , great recession , macroeconomics , management , engineering , history , mechanical engineering , telecommunications , medicine , alternative medicine , archaeology , pathology
Despite a sharp fall in GDP, German employment in terms of employees stayed remarkably robust during the Great Recession. At the same time, hours worked per employee declined significantly. This is seen as the core of the German employment ‘miracle’. A general discussion arose about the reasons behind this astonishing labour market performance and the role of short‐time work (STW) as a kind of exportable panacea. In this article we look at the macroeconomic implications of STW and other measures of internal flexibility, in particular focusing on the quantification of safeguarded jobs during the crisis. We find that STW played an important role and helped to safeguard employment in Germany during the Great Recession. However, we show that other measures of internal flexibility (working time accounts, contractual arrangements on working time reductions, reduction of overtime) were equally important. Together with STW these instruments saved around 1 million jobs. To explain and understand the German success story, the features of the German core model – with a strong employer–employee relationship of mutual trust, strong employment protection, traditional standard working contracts and strong works councils at the firm level – are of key importance.