How Germany able to control unemployment rate even through the crisis?

How Germany able to control unemployment rate even through the crisis? What policy used to control the unemployment rate? how they used it at the times of the crisis? What Labour market policies affected the more?

What is Labour Market Policy?

Labour market policy

Labour market policy is one of the Economic Policy. Which is implied by the Government to increase the Employment opportunities and decrease the Unemployment rates. Also helps to check the labor rate, retirement plans, minimum wages and additional allowances for people. So that there is no discrimination by the organizations/companies/industries.

Germany

Germany

Germany knows for one of the best labor market policies. Where unemployment rate 3.3 by the end of November 2018, by the Trade Economics.

Germany's unempolyment rate

Germany was also successful in reducing structural unemployment since the mid-2000s. Also, the Unemployment rates are at their lowest level in 20 years (according to the OECD) and are further decreasing.

Control Of Unemployment Rate In Crisis

Germany has been affected by two economic crises, first the financial crisis after the bankruptcy of Lehman Brothers in September 2009, and then the Eurozone crisis.


In spite of the crisis, Germany is able to control the Unemployment rate than the other countries.

The policy which helped for the controlling Unemployment rate is

Working-time Policy

The policy states that Employee or labor will not work more than certain hours per week. If they do companies or organizations will have to pay extra wages or additional allowance for each extra hour. But It will depend on the willingness of the employee, no company will force on the employee. This is one of the major policy in labor policies in every country.

Normally the working time in Germany was 35 to 40 hours per week. But at times of the crisis, Germany reduced the working time hours to 20 hours per week. After the Crisis working hours was back to normal. Followed by the figure:

Working time reductions by the Germany from 1991 to 2013

As Germany was avoiding full Unemployment during the crisis. So that Employees was able to fulfill the minimum needs throughout the crisis even though was a decrease in wages or salaries. Germany was back to normal after the crisis.

Conclusion

Working time reduction is the policy which helps in controlling the unemployment rate at the times of economic crisis. Germany was one of the countries which were successful in controlling the unemployment rate at the time of crisis. Every country can able to apply this policy at times of crisis to minimize the impact.

Leave a Reply

Your email address will not be published. Required fields are marked *