Germany, second only to China as the world's leading exporter of goods, has been particularly hard-hit by the collapse of global markets. But the mass unemployment some had feared has failed to materialize. Labor experts in many countries are wondering how Germany has done it....It was due in part to the workers in the program that Germany's new labor minister, Franz Josef Jung, was able to report an astonishing development last Thursday. In the midst of the country's deepest economic crisis, which has led to dramatic declines in order volume in key industries, unemployment was only half a percentage point higher in 2009 than it was in 2008. "The current figures are encouraging," Jung said. There are 3.2 million people registered as unemployed in Germany. At the beginning of the year, many had predicted up to 5 million would be unemployed by this fall.
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It was due in part to the workers in the program that Germany's new labor minister, Franz Josef Jung, was able to report an astonishing development last Thursday. In the midst of the country's deepest economic crisis, which has led to dramatic declines in order volume in key industries, unemployment was only half a percentage point higher in 2009 than it was in 2008. "The current figures are encouraging," Jung said. There are 3.2 million people registered as unemployed in Germany. At the beginning of the year, many had predicted up to 5 million would be unemployed by this fall.
This article is referring to what is known as "Kurzarbeitergeld": instead of sacking people outright, companies can cut work hours, and the state pays either 60 or 67% of the loss in income. The period for receiving these benefits was extended to 24 months. The employer only has to pay social contributions on the hours not worked.
The advantage for the employer is that she has a better chance of holding on to the skilled people she will need when the next order comes around. The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
