Employment Changes Within German Multinational Companies During the Global Recession 2008/2009

Explanations for the robust situation of the German labour market in the course of the global recession 2008/09 are the usage of short-time work schemes, the higher internal labour flexibility due to provisions of collective agreements and the reduction of positive balances on working-time accounts. However, another aspect has not been paid much attention to so far. Multinational companies could have reduced employment as a reaction to the global recession not in their home country, but mostly in their foreign affiliates. The possibility ofmultinational companies to choose in which countries they change employment as a reaction on a changed economic situation would have enhanced German economic policy measures. Using the microdatabase direct investment provided by the Deutsche Bundesbank, we analyze the employment changes within German multinational companies during the global recession 2008/9.We find evidence that employment adjustments took place mainly in the foreign affiliates stabilizing employment in Germany.