IfW in the News

The good and bad in Germany’s economic model are strongly linked

08.07.2017

Dennis Snower about the role of working-time accounts for the German job market, especially for the Mittelstand.

Excerpt from the article

(...) The culture of co-operation cuts both ways. When the Great Recession struck, firms in other rich countries laid off workers. In Germany, companies held on to staff despite a slump in orders and output. In this they were aided by the widespread adoption of working-time accounts, first used in the 1990s. Workers could bank overtime hours to take as paid holiday at a later date. Short-time working schemes also helped to limit the damage to jobs. But the response by the Mittelstand was a reflection of a system of conventions that standard economics ignores, says Dennis Snower of the Kiel Institute for the World Economy. Firms had stuck by an implicit deal with their workers.

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