Transformation in Policies against Mass Unemployment under Crises

: Expansion of Short-Time Work Allowance in Germany

Abstract

This paper focuses on the measures which German social state has taken under the crises with the concern about mass unemployment ; namely the world economic crisis in 2008/09 and Covid-19 crisis. In the past West Germany responded to recession through labor force reduction by means of early retirement. However, this framework was not sustainable due to pension finance and activation paradigm which pursues longer working life. The alternative way for the following crises was mainly ‘short-time work allowance,’ which has been designed to maintain employment and to lighten the burden of employers, whereby they temporally reduce working time of their employees （up to 100％） instead of laying them off. The Federal Employment Agency compensates partially for the missing net wage with social insurance or with federal budget. The scheme was adopted extensively by the German federal government under the world economic crisis in 2008/09 and enabled them to be held in high repute of ‘employment miracle.’ This has encouraged them to mitigate conditions for the allowance further during Covid-19. The measures for the non-insured persons such as low-wage workers, non-employed or self-employed were to be considered however are currently already realised. Promotion of vocational training during short-time work should be still facilitated.