New Developments and Beyond
Edited by Jon C. Messenger and Naj Ghosheh
Chapter 1: An introduction to work sharing: A strategy for preserving jobs, creating new employment and improving individual well-being
The global financial crisis that first hit the United States (which was already in a recession) in the autumn of 2008, and then the rest of the world shortly thereafter, can be likened to a ‘shock wave’. A massive wave of reduced liquidity in the financial sector unleashed by the dramatic collapse of Lehman Brothers generated a negative macroeconomic shock which drove down aggregate demand in countries around the world to a degree unseen since the Great Depression: credit markets froze, bringing lending to a virtual standstill, halting business investment, and driving consumer spending into a downward spiral. Thus, the economic ‘shock wave’ emanating from the financial sector had a profound effect on the ‘real’ global economy as well: for example, 28 of the 30 OECD countries were hit by a recession, and that recession was greater than the historical average in the depth of its impact on GDP in all but five OECD countries, the Czech Republic, Greece, the Republic of Korea, New Zealand and Switzerland (OECD 2010: 33). And the impact on GDP was not limited to the developed world, but stretched around the globe from China to Latin America – turning the global financial crisis into the Great Recession of 2008–09.