Germany’s Economic Response to the Coronavirus Crisis is an Example for the World, Union Chief Says

Germany’s approach to employment in the coronavirus crisis is an example to the rest of the world as to how to deal with the economic fallout of the pandemic, the head of the United Nation’s labor agency said.

Guy Ryder, the director-general of the International Labour Organization (ILO), told CNBC that countries, like Germany, that were able to maintain employment in the 2008/2009 global financial crisis and “enabled the continuity of processes and of institutions,” came out of that downturn much quicker.

He said Germany’s “Kurzarbeit,” or “short-time work,” program during the current pandemic has similarly set an example as to how deal with this economic crisis.

Under Germany’s system workers are sent home or see their hours slashed but are paid around two-thirds of their salary by the state.

It used the scheme in the last crisis, with an average of 1.1 million people affected by Germany’s economic contraction in 2009. While it cost the German government around 10 billion euros ($10.9 billion), by the end of that year the unemployment rate stood at 7.6%, lower than it was in 2008.

“Germany came out all that much better and I think these are lessons which I think apply pretty directly to what we’re living through now,” said Ryder.

Germany has now started to re-open certain businesses after enforcing a period of lockdown to contain the spread of the coronavirus like most countries around the world.

There have been 163,009 confirmed cases of Covid-19 in Germany and 6,623 deaths from the virus, according to latest figures from Johns Hopkins University.

Earlier this week, the ILO warned that 1.6 billion workers, nearly half of the global workforce, in the informal economy were at risk of losing their livelihoods because of the pandemic.

It also said that the global decline in working hours in the second quarter was now expected to be “significantly worse” than its previous estimate, as a result of extended lockdown measures keeping businesses around the world closed.

The UN labor agency now forecasts a 10.5% drop in working hours worldwide in the second quarter, the equivalent of 305 million full-time workers, up from its previous estimate of a 6.7% drop, or 195 million workers.

Ryder also lamented the lack of international cooperation between countries to help each other deal with the economic impact of the coronavirus, that was present in the global financial crisis.

“We need to see the G-20 do more, we need to see member states having the UN in the position to do more — it’s not too late but really the urgency is extraordinary,” he said.