Welfare for the Unemployed in Britain and Germany

Welfare for the Unemployed in Britain and Germany

Who Benefits?

Frances McGinnity

In recent decades, the problem of unemployment has generated fierce political and academic discussion on how national governments should address this issue. This book sheds light on a key debate in unemployment policy – that of whether unemployment benefits should be insurance-based or means-tested. It carefully compares the impact of the British and German benefit systems on poverty, the duration of unemployment and the spread of workless households during the 1990s.

Chapter 5: Comparing Durations of Unemployment

Frances McGinnity

Subjects: economics and finance, labour economics, social policy and sociology, comparative social policy, labour policy

Extract

In Chapter 1 we noted how Esping-Andersen (1990, 1999) writes about the insider/outsider tendency in conservative, insurance-based welfare regimes, of which Germany is one. This tendency is for core workers – those with fulltime, continuous employment histories – to be given priority over others. Gallie and Paugam (2000) and Schmid and Reissert (1996) note how insurance systems (like the German one) tend to protect well the incomes of core workers but neglect marginal workers. This claim is confirmed by the analysis in Chapter 4: in Germany those who have been core workers are not as vulnerable to income poverty as those who have previously not worked. In Britain, we do not detect such a strong distinction. In this chapter, in which we look at the duration of unemployment, we widen the idea of the institutional regulation of unemployment beyond the benefit system. We consider the market more carefully, and market differences between Britain and Germany. As we discussed in Chapter 1, one issue prominent in the discussion on the causes of unemployment has been the institutional regulation of the labour market and how it affects labour market clearing (Grubb and Wells 1993; OECD 1994; Siebert 1997). One of our typologies divided countries into those with high levels of labour market regulation and those with lower levels. But how does labour market regulation affect unemployment? In spite of much research, no conclusive findings have emerged. In particular, no simple relationship has been established between labour market regulation and the overall level...

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