Home > shorter work time > Econospeak: Shorter Working Time at Work

Econospeak: Shorter Working Time at Work

We wanted to show this to you, because we believe it will be important in the coming months as unemployment continues to rise despite all the talk of recovery.

As can be expected, given the global nature of the crisis, almost all countries have seen a rise in their rates of unemployment. This is to be expected, since a crisis is nothing more that an economic adjustment to changes in the way labor is being employed in the economy.

What is to be expected, however, is not always what is to be accepted. Thus each country is more or less implementing measures to combat unemployment, or not, as the case may be.

Some, like Germany have seen almost no change in employment, because it has implemented effective measures to combat unemployment by, among other things, shortening working time. While the US has seen a massive increase in unemployment over the past year, German unemployment has essentially gone unchanged.

A proposal along these lines has been made by Dean Baker.

Posted by Barkley Rosser to Econospeak blog:

So, as part of semi-peacefulness around here, I shall join Sandwichman (and Milkshakeman?) in munching on some of that stuff at the greasy spoon truck stop, particularly the German food, taking a bite of their policy of shortened work hours during the recession known as kazurbeit, of which I do not know all the details. However, I am prepared to say that whatever those details, the apparent evidence suggests that during the past year, Germany has had a relatively low impact of its recession, as measured in decline of GDP, on its unemployment rate. I shall simply present some numbers below, without further comment beyond noting that state governments in the US have also been following something like this with the furlough policy, and also to note that this is something both neoclassicals and Austrians would like, not to mention advocates of cooperatives, as it involves preserving jobs by cutting wages. So, I am going to show for several countries, their 2009 decline in GDP as reported in the 10/10 Economist, along with the Sept. 2008 unemployment rate, and the most recently available unemployment rate (oh, and keep in mind that France largely gave up its limited work hours approach in 2005).

Country 2009 GDP decline Sept. 08 Unemployment Rate Most Recent Unemployment Rate Month
Germany -4.9 8 8.2 (Sept. 09)
France -2.1 7.9 9.9 (Aug. 09)
UK -4.4 5.5 7.9 (July 09)
US -2.9 6.1 9.8 (Sept. 09)
Netherlands -4 2.5 5 (Aug. 09)
Switzerland -1.7 3.4 4.1 (Sept. 09)

Yes, you read that right:

German GDP fell by -4.9 percent, but its unemployment rate was virtually unchanged!

US GDP fell a little over half of what Germany’s fell, yet our unemployment rate jumped 60 percent!

Shorter working time works.

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