Short-time work is a question of power in the social market economy

Sebastian Dullien

Sebastian Dullien is Scientific Director of the Institute for Macroeconomics and Business Cycle Research at the Hans Böckler Foundation and Professor of Economics at the Berlin University of Applied Sciences.

(Foto: imago images/photothek)

At first glance, the intensity of the dispute over the extension of short-time work is surprising. With a single-digit billion figure, the costs of extended short-time work make up only a fraction of the rescue packages. The empirical resilience of the theses expressed is also in stark disproportion to the vehemence of the debate.

There is no empirical evidence that short-time work slows job mobility. In fact, more people change jobs during the boom than during the crisis. And more people are switching from one job to the next without first becoming unemployed. For this reason, economic support initially improves labor mobility.

Structural change does not empirically require the previous bankruptcy of companies. Apple has revolutionized the cell phone market with its smartphones without the traditional manufacturers having to fail beforehand. The vendors that did not adapt did not disappear from the market until later, but they did not hinder Apple’s innovation either.

Innovation doesn’t always come from new companies either. Nokia has successfully transformed itself in the 1990s from a paper and rubber manufacturer to a leading global cell phone manufacturer. Apple led a niche existence with PCs long before the iPhone.

It is not entirely plausible that companies that are expected to have to cut jobs should initially run short-time working for years and only then lay them off, given the remaining remanence costs of 25 to 30 percent for the companies.

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Consequences of short-time work

Then why the force in the debate? This can only be explained with the less-discussed long-term consequences of the various policy paths. If in the debate, as an example of the harmful effects of short-time work, it is stated that Gerhard Schröder implemented the Hartz reforms for five million unemployed, while Angela Merkel did not reform anything, this suggests that structural change does not always mean decarbonization and digitization of the economy is meant, but also a restructuring of the welfare state.

The reduction of jobs in existing automobile groups and the establishment of new plants without union organization threatens to reduce the bargaining power of the unions.

One or the other opponent of extended short-time work may at least accept that with approval. And one or the other supporter on the left will want to avoid precisely this with a view to the wage share, which has fallen in trend since the 1970s – and therefore relies on structural change in existing corporate structures instead of change through destruction.

In the end, short-time work is not just about an isolated instrument and its effect, but also about the distribution of power in the social market economy. And that understandably upsets the mind.

More: The crisis is not over yet. Therefore, the Union and the SPD are extending short-time working benefits and bridging allowances for companies, among other things. It’s not just economists who warn.

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