People and Politics Forum 24. 04. 2009

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Willing Helpers - The German Government's Interest in Securing Jobs

With a general election less than six months away, the government coalition is at pains to prevent media headlines featuring rising unemployment. Among the action being taken is a government-funded short-time working hours scheme, where employers pay as little as a third of the net wage. The objective is to prevent people being laid off due to a temporary downturn in business. The program is now set to be expanded in Germany and also introduced elsewhere in Europe. We visit a mid-sized Berlin optical technology company to see the scheme in practice and ask whether the government is right to intervene in the labor market.

Our Question is:

"Can reduced working hours safeguard jobs?"

In Germany, Jörg Brockmann targets selfishness and short-sightedness in his response:

"Reduced working hours can save jobs, but it definitely depends on ‘why’ and ‘how’ such work is implemented. I know of some companies where it appears that reduced working hours (along with other measures) have been used to balance the books and ensure big bonuses for management, and workers are fired in the end anyway. When a company reduces hours to 4 days per month without applying the measure to all departments, and then fires workers a month later, the application of reduced working hours is only beneficial to the company and not to the workers. What I miss is the willingness in higher level management to fight for the company and the workers. Letting workers go is not good for the economy as a whole. How many of us are willing to take reductions (in salary, vacation pay, year-end bonuses) to secure jobs? Compensation for these sacrifices might even one day be made once the company is doing better (...). The whole economy would benefit from such measures. As long as workers have to worry about their jobs in spite of reduced working hours, the economy will not be brought back on track."

Gustaf Woelfle from the USA delivers a short, resounding ‘No’:

"Can reduced working hours save jobs? No way. That’s nothing more than a band-aid solution meant to deceive workers in Germany."

From Costa Rica, Erwin Scholz delivers a poetic cry against state subsidies:

"Subsidies bring only chaos

from here to the high Himalayas.

When states start paying for consumers’ desire,

government funds flow, pouring oil on a fire,

The flash is shortlived, yet empties state vats,

leave coffers dry, starving smug bureaucrats."

Michael Kurt Stanek from Brazil wants some form of intervention but laments the lack of competencies to do so:

"I think that reduced working hours can save jobs over the short term. But the biggest mistake in the ‘Globalization mindset’ is to believe that markets will simply regulate themselves. It’s high time to the action necessary to alleviate the negative effects of the international economic crisis that has befallen us, yet nobody seems to know how. It’s as if a car has been sold to a customer, but nobody has asked if he knows how to drive or even if he can afford it."

Martin Burmeister from Venezuela gives a provisional nod to the practice, with clear reasoning:

"Reduced working hours, unfortunately, cannot save jobs over the long term. But a carefully targeted intervention on the part of governments is a necessary step to ensure that companies are able to retain the competent, skilled labor they will need once working hours return to normal."

From China, Tom Clyde warns of the sheep in the wolf’s clothing:

"Maybe reducing working hours is a good way to safeguard jobs in the short term. But if those companies mean to conserve profits and keep on making working hours shrink, the workers will have more and more free time, meanwhile less and less pay... that's almost equal to being dismissed."

Gerhard Seeger from the Philippines praises the short-term benefits of subsidization:

"A job with reduced working hours is probably a blessing over the short term: Any job is better than none. The German Federal Employment Agency covers 67% of the net wages from tax money that employees are paying into the system. In this manner, it could be said that workers are partially financing the reduced working hours program themselves. However, if the crisis persists, there will probably be more lay-offs."

Lee Davis says that solutions in Germany may not be suitable for his USA:

"Shorter working hours may work in Germany, but not everywhere. Here in the US employers pay employees‘ health insurance. Employers would need to reduce what they pay for health insurance. Many employees, would be (better) off just going to work for someone else."

René Junghans of Brazil commends government action to help workers:

"Of course reduced working hours can safeguard jobs. That the state has intervened here is laudable, as it is hardly likely that the firms themselves would be able to secure jobs out of their own pockets in such a severe crisis period. Wages in Germany are simply too high and profit margins too low to be able to keep workers engaged long-term, when sales aren’t strong enough to ensure a healthy profit margin. Without government support, Germany would have far more unemployed and probable nationwide social unrest in the near future."

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