Life Inc.: How Germany treated the job problem

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Centre for economic and policy research

Unemployment rate change from country to country. The OECD uses a "harmonised" unemployment measure, because not all countries measure unemployment in the same way.

By Allison Linn, senior business writer

We all know what in the United States during the great recession: millions of Americans their jobs lost, unemployment skyrocketed and we are still suffering the consequences.

Here is something which less is known: in Germany between 2007 and 2009, the opposite has happened, and the unemployment rate actually was, according to a report published last week by the Center for economic and policy research, a liberal leaning economic think tank.

German economy that world trade is strongly dependent on during the recession, suffer, said John Schmitt, an economist with the CEPR, who have prepared the report.  What is difference as the two countries responded to this economic downturn.

In the United States cut most employers jobs. In Germany they cut hours.

"It was widespread shift from full time of to a few hours," said Schmitt.

Germany has much more highly unionized employees as the United States, and some of those cuts came from negotiations about things like overtime and work hours, Schmitt said. Strong employee protection made it even more expensive for some companies to lay off workers as to reduce the report noted.

But Schmitt said another difference was that if employers on hours cut, the Government made available to those employees with partial unemployment benefits. Compensated somewhat for the smaller paychecks, so that consumers, less than in the United States funds.

In the United States, some employers their workers hours reduced, and there are currently about 8 million Americans, the part-time work but would like to work full time.

For employers cut jobs completely when work slowed down, and it is far more typical nor was 14 million unemployed Americans. The employment situation has many Americans firmly on cash and unwilling, free to spend leave economic recovery hinders further.

Schmitt said there are some States to collect the workers on short-time work if their hours are reduced, but only a few Americans actually use.