German Labour Market Resilience in Times of Crisis: Revealing Coordination Mechanisms in the Social Market Economy

Most observers point to the importance of short-time work (Kurzarbeit) as one of the key explanations for Germany's stellar employment performance during the economic downturn in 2008-09. In this paper, I reveal previously unidentified causal mechanisms that have led to the widespread application of Kurzarbeit: the Christian Democrats' embrace of the Social Market Economy, the formation of an 'informal' neo-corporatist alliance, the well-functioning communication channels within the public employment service and social partner organisations, and the 'watch dog' role of firm-level metal labour unions. This paper also reflects on the state of Germany's coordinated market economy despite the neoliberal discourse at European level, its labour market responses to the Corona pandemic of 2020, and the possible lessons for the Italian case.