Safety Nets Help Europe Resist Stimulus

Protections for workers put in place long ago may lessen the need
By Jason Farago,  Newser Staff
Posted Mar 27, 2009 6:53 AM CDT
Workers arrive for the early shift at the Opel factory in Bochum, Germany, Thursday, Feb. 19, 2009.   (AP Photo/Martin Meissner)
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(Newser) – Ahead of next week's G20 summit, the US and Europe are engaged in a major dispute over the best way to end the global recession: Washington wants more stimulus, while Germany and other EU nations say they've done enough. One overlooked factor in the debate, writes Nicholas Kulish in the New York Times, is generous social legislation that has cushioned the blow of unemployment. "In contrast to America, our social systems are not on the decline right now," Angela Merkel said last week.

During boom years, free-market advocates derided the European model. Now, European workers are enjoying extensive job protections, including government compensation for employees reduced from full- to part-time. And that, say Merkel and other politicians, compounds the economic impact of EU nations' smaller stimuli. As one welder cut to part-time said, "Of course I’m concerned about the reduced wages, but it’s better than getting fired."