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 UR Recent UR
Germany -4.9 8.0 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 -4.0 2.5 5.0 (Aug. 09)
Switzerland -1.7 3.4 4.1 (Sept. 09)
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Oh shit. I forgot that this dumb system kills breaks. I has this all looking nice and neat, and now it is garbled mess. So, just to do a summary: Germany declined 4.9% with a miniscule 0.2% increase in the unemployment rate, France declined 2.1% with a 2.0% increase in its unemployment rate, UK declined 4.4% with a 2.4% increase in its unemployment rate, US declined 2.9% with a 3.7% increase in its unemployment rate (why is the US record so crappy?), the Netherlands had a 4.0% decline with a 2.5% increase in its unemployment rate, and Switzerland had a 1.7% decline with a 0.7% increase in its unemployment rate. The bottom line is a much better performance by Germany in terms of holding on to jobs in the face of a pretty serious GDP decline compared to other comparable nations.
Das ist Kurzarbeit, mein freund. I'll repeat Tim Bartik's hat tip to an article in the July Upjohn Institute newsletter by Sue Houseman and Katherine Abraham arguing, "The absence of STC benefits is a significant gap in U.S. social insurance policy that should be plugged." A PDF copy of the article is available at:
http://www.upjohninst.org/publications/newsletter/kga-snh_709.pdf
And, as someone who has been spending a lot of time in Germany, let me put in a plug for Kurzarbeit too. Some things to note:
1. German statistics are always biased towards more unemployment, partly because of measurement differences, but also the incomplete integration of the former GDR. Rates in the west are lower.
2. Germany is unusually exposed to this downturn, since it depends so highly on exports. Just to not do worse would be a triumph.
3. My personal perception is that, because of Kurzarbeit (and despite Hartz) the mood in Germany is much less anxious than it is here. Unions are not rushing to offer givebacks, and the recent election was only slightly about how much stimulus is necessary. (It was more about stimulus via spending vs tax cuts.) Indeed, one of the criticisms of Germany is that it has not shouldered its share of EU stimulus because it has not felt so much pain. (But there may be measurement issues here too, a tangent I won't follow right now.)
Kazurbeit? Kurzarbeit?
"You say potato, and I say potatoe." Dan Quayle
"Kurzarbeit" is literally "short work" but means short-time working.
"Kazurbeit" is short for Kazoo-Arbeit, which is the kind of work one does when talking into a musical instrument that modifies the sound of a person's voice by means of a vibrating membrane.
There is also Kurzkazooarbeit, which is cutting short work on the kazoo when your lips get all numb and tingly.
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