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Did the German model survive the labor market reforms?

Author

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  • Möller, Joachim

    (Institute for Employment Research (IAB), Nuremberg, Germany ; IZA ; Universität Regensburg)

Abstract

"This paper discusses the specific features of the German model as a specific variety of capitalism that is distinct from the Anglo-Saxon model because it builds more on social security and social partnership. It argues that the German model has experienced increasing pressure due to growth in systemic unemployment since the mid-1970s. The situation worsened as a result of the financial distress experienced after re-unification. Therefore, although painful for some groups of workers, the labor market reforms implemented from 2003 to 2005 were necessary to keep the German model alive. I argue that a certain erosion of the German model resulting from less collective bargaining coverage, labor market segmentation and higher wage inequality has falsely been attributed to the reforms. Rather, these phenomena are caused by long-run trends that were already occurring in the 1990s or even earlier. The German economy successfully passed the stress test of the Great Recession and is exhibiting ongoing employment growth. Basic features of the German model such as long tenures for qualified prime-age workers or the dual training system remain essentially intact. Hence, the German model is not dead, but vitally alive. However, some prudent counter-measures need to be implemented to fight against creeping erosion from segmentation and inequality. These should be taken with a sense of proportion in order to not jeopardize the great employment-related successes of the reform." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Möller, Joachim, 2015. "Did the German model survive the labor market reforms?," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 48(2), pages 151-168.
    • Handle: RePEc:iab:iabjlr:v:48:i:2:p:151-168
    DOI: 10.1007/s12651-015-0182-9
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    Cited by:

    1. Yunsoo Lee, 2025. "Weathering the Shock of the Great Recession in France and Germany," Public Organization Review, Springer, vol. 25(1), pages 153-167, March.
    2. Boysen-Hogrefe, Jens & Fiedler, Salomon & Groll, Dominik & Jannsen, Nils & Kooths, Stefan & Plödt, Martin & Potjagailo, Galina, 2015. "Deutsche Konjunktur im Winter 2015 - Aufschwung gewinnt wieder an Fahrt [German Economy Winter 2015 - The German economy is regaining momentum]," Kieler Konjunkturberichte 14, Kiel Institute for the World Economy.
    3. Dieckhoff, Martina & Giesecke, Johannes, 2024. "Growing or declining penalties? A cross-temporal analysis of unemployment scars in the German labor market," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 121, pages 1-17.

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    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General

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