Andreas Crimmann, Frank Wießner, Lutz Bellmann
Surprisingly, after the deep global recession due to the financial and economic crisis many economies experienced a boom. But while many countries are still suffering from job losses during the crisis and a jobless growth afterwards, the German labor market remained remarkably stable and is now even prospering. For the “German Job Miracle” a number of reasons are quoted. Among others, generous use of working time accounts, allowing a huge negative balance of working hours was agreed between the social partners. Additionally, establishment-level pacts were adopted which provided some more flexibility in terms of working time and salary. And, mostly different from many other countries, German establishments made extensive use of work-sharing (i.e. short-time work allowance), which turned out to be the most important labor market policy instrument (see Crimmann et al. (2010): The German work-sharing scheme - an instrument for the crisis. ILO: Conditions of work and employment series, 25, Geneva).
The basic idea is simple and not new at all. (For an overview see e.g. Vroman / Brusentsev (2009), “Short-Time Compensation as a Policy to Stabilize Employment”, Urban Institute / University of Delaware and Messenger (2009), “Work Sharing: A Strategy to Preserve Jobs during the Global Jobs Crisis”, ILO: TRAVAIL Policy Brief No. 1, June 2009). Although, a number of countries have also been operating similar approaches for several decades and some other countries joined just recently, work sharing in Germany is extraordinary in several concerns: may it be the outreach in terms of both establishments and participants, may it be the conditions of the programme in terms of duration or the amount of individual compensation for lost working hours. At the peak of the crisis in May 2009 the German short-time work compensation scheme was used by roughly 60,000 establishments and about 1.5 million participants. The intervention was quite expensive: costs borne by the Federal Government amounted to approximately five billion Euros solely for the fiscal year 2009.
After a brief glance at the global labor market after the financial meltdown we explain some general mechanisms of work sharing in Germany. Furthermore we present an overview of the costs of work sharing for the establishments. For our empirical analyses we use data from the IAB-Establishment Panel, an annual survey of about 16,000 establishments, which is representative for the labor demand in Germany. In detail, based on survey data for the years 2009 and 2010, we test for the following hypotheses, using probit and truncated regression models:
- Before going for work sharing, firms try to reduce their labor capacities by using other flexibility measures;
- Firms affected by the crisis tend to use (more extensively) work sharing;
- Firms try to hoard qualified labor.
Furthermore, with a difference-in-difference estimation we compare employment developments in establishments with and without work sharing in order to assess the employment effects of both short-time work allowance and working time accounts during the global crisis.