by John Schmitt, AlterNet, 5/30/11
Germany’s success indicates that one way to fight unemployment would be some modest efforts to give U.S. employers incentives to cut hours, not workers.
The Great Recession hit harder in the United States than in most of the rest of the world. Among the world’s rich economies, we experienced the third largest increase in unemployment, trailing only Spain and Ireland. Most advanced economies saw substantially smaller increases in unemployment and one –Germany– actually saw its unemployment rate decline.
Can we learn anything from countries that weathered the Great Recession better than we did? … Germany’s economy has been up and down since unification in the early 1990s, but points one way out of our mess.
…Unemployment in Germany is lower now than it was before the downturn….
Germany has done well because its labor-market institutions encourage employers to cut hours not workers. Instead of laying off 20 percent of workers, say, a firm can instead lower the average hours of its employees by 20 percent. Both accomplish the same goal, but from a social point of view, cutting hours is much better because it shares the pain more equally and keeps workers tied to their jobs….
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