Despite the historic 10 percent collapse in German GDP, the unemployment rate in the world’s fourth biggest economy ticked just a few notches higher — thanks to a short-time work program with roots dating back a century. It has been frequently tapped to protect jobs since the oil crisis in the 1970s.
Germany’s unemployment rate rose to just 4.2%, from 3.8% at the end of March, according to EU data. That translates to a loss of 203,000 jobs, taking total unemployment in Germany to 1.86 million.
Comparatively, June unemployment stood at 7.1% in the European Union and 11% in the U.S.
The country’s low unemployment rate can be attributed to the “Kurzarbeit” program. Short-time working protects jobs by allowing companies to reduce hours and wages, which are then subsidized by the state.
Some 6.7 million Germans are currently working in this way, according to ING’s Eurozone chief economist, Carsten Brzeski.