June 2011

IZA DP No. 5780: Short-Time Work: The German Answer to the Great Recession

revised version published in: International Labour Review, 2013, 152 (2), 287-305 [Details & Download]; Spanish version published as 'Desempleo parcial, la respuesta alemana a la Gran Recesión' in: Revista Internacional del Trabajo, 2013, 132 (2), 325-344 [Details & Download]; French version published as 'Le chômage partiel: réponse de l'Allemagne face à la grande récession' in: Revue internationale du Travail, 2013, 152 (2), 311-330 [Details & Download]

Short-time work was the "German answer" to the economic crisis. The number of short-time workers strongly increased in the recession and peaked at more than 1.5 million. Without the extensive use of short-time work, unemployment would have risen by approximately twice as much as it actually did. Short-time work has certainly contributed to the mild response of the German labor market to the crisis, but this is likely due to the country-specific context. Although the crisis has been overcome and employment is strongly expanding, modified regulations governing short-time work are still in place. This leads to undesired side effects.