The Future of the High-Skill Equilibrium in Germany

Is the celebrated German skills system in peril? Western German employers have cut apprenticeship places since the 1980s, while the institutional supports of the "high-skill equilibrium" (HSE) analysed by Finegold and Soskice (1988) are threatened: the globalization of equity markets menaces the 'patient capital' on which German companies depend; lean production techniques have rendered strategies of incremental innovation vulnerable on international markets; and German employers and labour face mounting organizational difficulties. This article derives implications from the HSE-model to assess these challenges against existing evidence. In fact, only the declining capacity of employers' associations and unions constitutes an empirically verifiable threat to the German apprenticeship system, the magnitude of which depends on questionable assumptions of the HSE-model. Of potential future salience, though, is the growing importance of service-sector jobs and the further training system in Germany, which may eventually undo the political compromise on which the HSE has historically rested. Copyright 1999 by Oxford University Press.