BERLIN, Germany - Unemployment is rising in most European Union countries, as the effects of crippling sovereign debt crisis, and the austerity measures prescribed to tackle it, take their toll.
Yet the bloc's biggest and richest member has seemed almost immune to the effects of the crisis, particularly when it comes to its labor market. While dole queues lengthen in Spain, France and Greece, in Germany they are rapidly dwindling.
In fact Germany has seen the number out of work decrease to its lowest level since 1991. It's a remarkable turnaround.
While many other countries were booming before the crisis hit, Germany was dubbed the "Sick Man of Europe," as it struggled to cope with the ongoing economic effects of reunification. In 2005 unemployment reached a peak of 12.5 percent, crucially exceeding the 5 million mark. Since then it has been almost halved, with a rate of just 6.6 percent in December 2011.
So how have German workers been left relatively unscathed by the crisis?
Experts point out that one of the most important factors is that Germany deployed a number of instruments to keep people in their jobs even during the most trying days of the financial crisis.
One was the government program known as "Kurzarbeit," which allowed employers to significantly reduce workers' hours, with the state stepping in to make up most of the shortfall in pay. Another was the so-called work-time accounts, whereby unions and companies agreed to let workers build up a bank of overtime that they could then use to take paid leave when there was a downturn in business.
The upshot was that companies held onto their skilled staff, allowing them to react quickly when demand picked up again. "As Germany's competitiveness had already been relatively strong in the industrial sector before, it could very quickly react during the recovery phase," explained Alexander Herzog-Stein, an economist with the Macroeconomic Policy Institute (IMK), a think tank with links to Germany's trade unions.
Another element in protecting the German labor market from the vagaries of the crisis was that there was no real estate crash like that experienced in other European countries, such as Spain or Ireland. "We didn't have this kind of property bubble on the domestic market that burst," explained Karl Brenke of the German Institute for Economic Research (DIW), "so the consequences of the financial crisis were limited to exports."
