Explaining the German Employment Miracle in the Great Recession The Crucial Role of Temporary Working Time Reductions

Arbeitspapier

This paper investigates the reasons for the exceptionally robust performance of the German labour market during the Great Recession. While GDP dropped by more than five per cent in 2009, employment remained constant and started to increase soon after. We compare this recession to other major recessions in Germany and analyse to what extent changes in hourly productivity and working time cushioned their impact on employment. We find that reductions in hourly productivity played a significant role in all recessions while working time reductions helped to safeguard jobs only occasionally. However, in the Great Recession, temporary working time reductions were amply used to stabilise employment. Using a time series model, we show that the reduction in hourly productivity during the Great Recession is predictable with historical data, while the reduction in working time was unexpectedly pronounced. Using detailed information on instruments for the adjustment of working hours, we show that new instruments which have been established in the decade before the Great Recession have been heavily used to reduce working time in the Great Recession. We argue that the development of these instruments was only possible within the framework of corporatist industrial relations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IMK Working Paper ; No. 114

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Business Fluctuations; Cycles ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Demand and Supply of Labor: General ; Labor-Management Relations, Trade Unions, and Collective Bargaining: General
• Subject: Germany ; Great Recession ; employment miracle ; working time reduction ; labour hoarding ; internal labour market flexibility ; working time accounts ; short time work ; Konjunktur ; Erwerbstätigkeit ; Arbeitszeit ; Unterbeschäftigung ; Arbeitsmarktflexibilität ; Interner Arbeitsmarkt ; Arbeitszeitgestaltung ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Herzog-Stein, Alexander ; Lindner, Fabian ; Sturn, Simon
• Event: Veröffentlichung
• (who): Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)
• (where): Düsseldorf
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/105977
• URN: urn:nbn:de:101:1-201403118516
• Last update: 10.03.2025, 11:41 AM CET