Corona and the labour market: It grants time for the Setting!

In 2009, plunged Germany into a deep recession, but the disaster on the labor market did not, fortunately. This year, there will be no repetition of the former

Corona and the labour market: It grants time for the Setting!

In 2009, plunged Germany into a deep recession, but the disaster on the labor market did not, fortunately. This year, there will be no repetition of the former script. Because the labour market was not only due to a short work by the financial crisis, but also due to relatively stable recruitment. In April and may 2020, the outflow from unemployment into employment, and the messages of new jobs fell to around 50 percent of pre-crisis levels.

Corona threatens, therefore, to the new adjustment to crisis. So as to avoid the short-time work money companies supported, lay-offs, we need so urgently, the funding of new hires. Of these, there are usually several million per year – even if only one part fails, are programmed, protracted unemployment and a "Generation of Corona" of graduates.

There are good and scientifically-based arguments for such a temporary setting to promote in the current crisis. So a high-quality, well-made study shows that a temporary cessation grant in the crisis year of 2009 unfolded in France, significant positive employment effects.

deadweight effects, as a counter-argument

A macro-economic simulation study for Germany results in the fact that a hiring subsidy employment, and gross domestic product of much more than the same gross expenditure for traditional government spending programs. The multiplier effect is significantly larger, because of the direct Jobs and income are created.

the Temporary and unexpected hiring subsidies would change the level of gross wages directly, as rules such as collective bargaining and minimum wages set the framework. Consequently, this would arrive to a large part of the hiring employers and, accordingly, the setting of incentives greatly increase.

In the economic policy debate to be raised, especially entrainment effects as an Argument against hiring subsidies. Of course, it would be inevitable that the recruitment subsidy would be paid in many cases where the setting would be already done. Interestingly, similar arguments were in the case of other measures, such as the planned VAT reduction hardly made (consumption that would anyway occur).

Updated Date: 30 June 2020, 07:19

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