By Harry Kelber | The World of Labor | July 10, 2012

Both Republicans and Democrats have just about given up on the idea of providing millions of jobs (except talking about it as an election issue).

But Germany has found a solution that puts cash into the pockets of the unemployed, while reducing the jobless rate to 6 percent (at a time when it was 9 percent in the United States.)

How has Germany done it? How has it managed to dramatically drop the unemployment rate in the middle of their biggest economic crisis in 80 years? The answer is that the government of Chancellor Angela Merkel not only pursued a different economic path than the Obama administration, but Germany also has a greater degree of economic democracy than the U.S.

Germany’s Unique Solution to Unemployment

The first of these policies is called Kurzarbeit or "short work," in which, instead of laying off millions of German workers, the companies trimmed the hours of all employees. Workers were cut back to, say, 90 percent of full-time work, but would still receive 95 percent of pay, with most of their lost wages being made up from a special fund, stored away by the government during more prosperous times.

In essence, instead of the government and employers paying unemployment benefits to laid off workers, they paid to keep workers at their jobs, but at reduced hours.

For workers, having a job that has been reduced by 90 percent of full-time was better than being unemployed, as it keeps them engaged in the workforce and puts more money in their pockets than if they were being on unemployment alone. For the employers, it keeps the workforce intact and ready for an upswing.


American Labor Reformers are researching other ways, both in the U.S. and abroad, to create the millions of jobs that are desperately needed. Did you know that more than 6 million workers lost their manufacturing jobs between 1998 and 2009?

Become a Labor Refomer <mailto:hkelber@earthlink.net> . Join the fight to build a bigger and stronger labor movement. Don’t you think it’s time for a change?

Harry on Facebook
Publications