The Response of Wages and Actual Hours Worked to the Reduction of Standard Hours in Germany
AbstractA transformation of what had become a universal 40-hour standard working week in Germany began in 1985 with reductions negotiated in the metal-working and printing sectors. These reductions have continued through 1995, and were followed by reductions in other sectors. The union campaign aimed to increase employment through ‘work-sharing’, and is being emulated in the United States with the launch of a reduced hours campaign by the AFL-CIO. Using data from the German Socio-Economic Panel, I find that increased overtime or reduced short time was little used to offset the reduction in standard hours: a one-hour reduction in standard hours appears to have translated into a reduction in actual hours worked of between 0.85 and 1 hour for workers in manufacturing. One might expect this to have resulted in a loss of earnings for workers in affected industries. I substantiate the union’s claim of ‘full wage compensation’, however: reductions in standard hours were accompanied by a relative rise in the hourly straight-time wage of 2–3% for each hour fall in standard hours; enough to keep monthly earnings the same as in unaffected industries.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1526.
Date of creation: Dec 1996
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- Jennifer Hunt, 1996. "The Response of Wages and Actual Hours Worked to the Reduction of Standard Hours in Germany," Discussion Papers of DIW Berlin 138, DIW Berlin, German Institute for Economic Research.
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
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