September 22, 2011
The NYT noted that Germany’s unemployment rate is just 6.2 percent and told readers:
“One reason is a series of policies that loosened job protections and put more pressure on unemployed people to find work.”
That might be one reason, although most research shows that these measures have a limited impact on unemployment. The more obvious explanation for Germany’s low unemployment rate is its policy of work sharing. This policy encourages firms to reduce work hours rather than lay off workers. The result has been that Germany has met its reduced demand for labor primarily by shortening work hours.
The context for this comment was an assertion that Greece will have to take comparable measures to force people to find work. The prospect of work sharing in Greece and other countries facing demands for austerity might look like an attractive alternative to maintain employment during the downturn.
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