Why short-time work measures help curb mass unemployment

The economic impact of the coronavirus pandemic will be felt across the global economy and in society, as it disrupts sectors and workers fear unemployment. In Germany, however, there is hope that the model of “Kurzarbeit”, or short-time working, will help people retain their jobs.  

The idea behind short-time work is that in times of economic trouble, companies can cut worker’s hours or temporarily lay them off, but aren't forced to let them go permanently. The government replaces some of the workers’ lost income to keep them from falling into unemployment. 

“It is one of the reasons why Germany recovered so quickly after the 2008-9 crisis,” said Anke Hassel, Professor of Public Policy at the Hertie School, in a story in the Financial Times published on 23 March.   

When the coronavirus began to spread, the German government quickly passed legislation that saw an expansion of the scheme and easier access to “Kurzarbeitergeld”, or short-time compensation. The policy could also be a fit for other countries, especially those like Germany with a strong focus on vocational training, the FT writes.  

“Companies invest a lot in improving the skills of their workforce and, if there’s a crisis, they shouldn’t be forced to let them go,” she explained. “If they do, they won’t be available in six months’ time.” 

Read the full article in the Financial Times.