Employment Protection, Unemployment Compensation and Activation in Europe
Globalization and Welfare series
Edited by Paul de Beer and Trudie Schils
Bernhard Ebbinghaus and Werner Eichhorst INTRODUCTION: PARTIAL DEPARTURE FROM PASSIVE EMPLOYMENT POLICIES High unemployment has been a central predicament of Germany since the mid-1970s, particularly intensified since unification in 1990. The persistent unemployment problem has been linked by critics to generous unemployment benefits, soaring labour costs and a rigidly regulated labour market. In fact, German statutory employment protection for regular employment contracts is relatively high and compulsory social insurance provides earnings-related unemployment benefits, given a sufficient contribution period. The 2005 reform that replaced the earnings-related long-term unemployment assistance with a means-tested flat-rate minimum income support scheme was a major break with Germany’s long tradition of status maintenance. This reform was part of a broader policy shift towards activation also involving an overhaul of active labour market policies and organizational reforms of labour market administration. However, regarding employment protection only some liberalization measures at the margin of the labour market occurred. In terms of governance, social security, labour market policies and employment protection are mainly based on national legislation, though leaving some role for the social partners. In the area of labour market policy, the employers and trade unions had a substantial role in the tripartite self-administration before the reorganization of the Federal Employment Agency (Bundesagentur für Arbeit or BA) which now restricts their responsibility to supervision only (Trampusch 2002; Bieber et al. 2005). German employment protection is legislation-driven and relatively universal, collective bargaining on employment regulation is not very important except for sector-wide agreements supplementing dismissal protection, firm-level employment...