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Labour Market Reform in Germany: How to Improve Effectiveness

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  • Eckhard Wurzel
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    Abstract

    High levels of unemployment and rising social charges have lead to considerable pressure on labour markets to adjust. Major steps in labour market reform have been implemented over the last three years. These need to be followed up in several respects in order to raise the economy’s capacity to generate employment. The present tax and transfer system still implies significant disincentives for labour supply of older people and spouses, which should be eliminated. Unemployment related benefits and active labour market policies can be better geared toward activating the unemployed, while institutional reform of the Public Employment Service should continue. On the labour demand side, there remains scope to raise the efficiency of Germany's employment protection system. Also, provisions should be made to allow for a higher degree of wage flexibility across qualifications and regions to fight unemployment. Regulatory conditions in other parts of the economy interact in important ways with labour market performance, underlining the need for a broad based reform approach. This Working Paper relates to the 2006 OECD Economic Survey of Germany (www.oecd.org/eco/surveys/Germany). La réforme du marché du travail en Allemagne : Comment améliorer l'efficacité Face à un chômage élevé et à un alourdissement des charges sociales, des ajustements sont devenus de plus en plus nécessaires sur les marchés du travail. D'importantes réformes du marché du travail ont été mises en oeuvre ces trois dernières années. Elles doivent être poursuivies dans plusieurs domaines afin de permettre à l'économie de créer davantage d'emplois. Le système actuel de prélèvements et de transferts dissuade encore dans bien des cas les personnes âgées et les conjoints de travailler, situation à laquelle il y aurait lieu de remédier. L'indemnisation du chômage et les politiques actives du marché du travail pourraient être conçues de manière à favoriser davantage le retour à l'emploi des chômeurs, et la réforme institutionnelle du service public de l'emploi doit être poursuivie. S'agissant de la demande de main-d'oeuvre, l'efficience du système de protection de l'emploi pourrait être améliorée. Par ailleurs, il y aurait lieu de prendre des dispositions pour permettre une plus grande flexibilité des salaires en fonction des qualifications et suivant les régions, afin de lutter contre le chômage. Les conditions de réglementation dans d'autres secteurs de l'économie interagissent de façon importante avec la performance du marché du travail, soulignant le besoin d'une approche globale des réformes. Ce document de travail se rapporte à l’Étude économique de l’OCDE de l’Allemagne (www.oecd.org/eco/etudes/Allemagne).

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    File URL: http://dx.doi.org/10.1787/430053878556
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    Bibliographic Info

    Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 512.

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    Date of creation: 06 Sep 2006
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    Handle: RePEc:oec:ecoaaa:512-en

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    Keywords: employment; labour market reform; labour force participation; wage rigidities; wage determination; policy synergies; unemployment benefits; activation strategies; unemployment; employment protection legislation; Germany; minimum wage; public employment services; service public de l'emploi; réforme du marché du travail; allocations chômages; activité des personnes sur le marché du travail; rigidités salariales; synergies des politiques; stratégie d'activation; détermination des rémunérations; emploi; salaire minimum; législation sur la protection de l'emploi; chômage; Allemagne;

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    Cited by:
    1. Ulrich van Suntum & Jens Oelgemöller & Cordelius Ilgmann & Tobias Böhm, . "Walter Eucken`s Principles of Economic Policy Today," Working Papers, Institute of Spatial and Housing Economics, Munster Universitary 201175, Institute of Spatial and Housing Economics, Munster Universitary.

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