Evidence from Europe
Edited by Daniel Vaughan-Whitehead
Chapter 6: The German Labour Market after the Financial Crisis: Miracle or Just a Good Policy Mix?
Gerhard Bosch INTRODUCTION 1. In the wake of the financial crisis, the German economy experienced its most severe slump since the Second World War. However, the effects on the labour market were different from those experienced in all previous economic crises. Employment did not decline as expected and unemployment did not rise. Moreover, youth unemployment did not increase, in contrast to experience in virtually all other European countries. This chapter sets out to investigate this German employment ‘miracle’. It will be shown that state-subsidized short-time working arrangements were not alone in preventing a collapse in unemployment but that a key role was also played by several other working time instruments incorporated into collective agreements concluded between trade unions and employers. The role of the parties to collective bargaining in avoiding an increase in youth unemployment should also be emphasized. It will also be shown that not only core workers but, through the dual system of vocational training, also young workers benefited from internal labour markets. Some categories of workers – mainly agency workers – were, however, the victims of external adjustments. In the economic upswing after the crisis German firms are mainly recruiting temporary agency workers, thus further increasing the dual structure of the German labour market. The main body of the chapter begins with an analysis of the very particular path taken by Germany’s economy, which differs considerably from that taken by other industrialized countries (Section 2). The various instruments for redistributing work and their deployment in the crisis are then...
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