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German Labour Market
Successful Labour Relations Models in
Europe: the German, Austrian and
Danish models
Madrid, 08th Februar 2010
Dr. Ulrich Walwei
Madrid, 08.02.2010
German Labour Market
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The German Labour Market – Some Basic Facts
Labour Market Reform and its Impacts
Labour Market Effects of the Financial Crisis
Industrial Relations and Employment
Future Challenges
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The German Labour Market –
Some Basic Facts
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Real Gross Domestic Product
- constant prices, growth rates per year 4,0
3,2
3,2
3,0
2,5
2,0
2,0
2,0
1,2
1,2
1,0
1,3
0,8
0
0,0
-0,1
-1,0
-2,0
-3,0
-4,0
-5,0
-5,0
-6,0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Destatis
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Employment Rates 1998 - 2008
- percentages 80,0
Denmark
75,0
Austria
70,0
Germany
65,0
EU-15
EU-27
60,0
Spain
55,0
50,0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: Eurostat
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Madrid, 08.02.2010
Unemployment Rates 1998 - 2008
- percentages 16,0
14,0
12,0
Spain
10,0
Germany
8,0
EU-15
6,0
Denmark
4,0
Austria
2,0
0,0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: Eurostat
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Labour Market Trends in Germany (I)
 Unemployment in Eastern Germany is much higher
than in Western Germany – almost twice as high
 Employment rates of women and men are
converging, but less with respect to full-time
equivalents
 Unemployment rate of youth is still quite low, but
increasing problems for less educated youngsters
 Employment rate of the elderly is still low compared
to other age groups, but has increased recently
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Labour Market Trends in Germany (II)
 Less qualified bear a comparatively high risk of
being without any job
 Non-standard work arrangements such as part-time
work, fixed-term contracts and temporary agency
work have gained in importance
 Low wage employment has increased significantly
over time
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Labour Market Reform and its Impacts
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Main Elements of German Labour Market Reform
More flexible employment
- Dismissal protection
- Agency work
- ''Mini''- and ''Midi''-Jobs
Expected effect:
• Stronger permeability
of the labour market
New labour market policy
- Activation as a guideline
- Changes of the organisations involved
- Less generous benefits for long-term
unemployed
- More effective programmes
Expected effect:
• Improved matching
• Intensive job search
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Employment Trends during different Boom Periods
- changes in % 8
7,0
7
6,6
Boom period 1998 / 2001
Boom period 2005 / 2008
6
4,9
5
3,7
4
3,7
3,4
3
2,5
2
1
0,6
0
Real GDP
Total Employment
Total Hours
Employment covered by
social security
Source: Destatis, IAB
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Matching Efficiency
Beveridge-Kurve, Januar 1992 bis Februar 2009
Registered vacancies (thousands)
- Beveridge-Curve: Registered Vacancies and Unemployed 1992 to 2009 -
Total unemployed (thousands)
Bemerkungen: Saisonbereinigte Monatswerte (ohne irreguläre Komponente). Quelle: BA, IAB.Source: BA, IAB
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Labour Market Reform: More acceptance of lower wages
- Findings from an establishment survey 30
25
20
2005/2004
2006/2005
15
10
5
0
increased
gestiegen
gesunken
decreased
Differenz
difference
Source: Vacancy Survey of the IAB
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Long-term unemployed as a
LZA
allen Alo
share of
totalan
unemployed
Long-Term Unemployment Rates (1998-2009)
Long-term unemployed as a
LZAofinthe
%labour
der EP
share
force
45,00
10,00
40,00
9,00
8,00
35,00
7,00
30,00
6,00
25,00
5,00
20,00
4,00
15,00
3,00
10,00
2,00
5,00
1,00
0,00
0,00
1998
1999
2000
2001
2002
2003
2004
Long-term unemployed as a(an
share
Langzeitarbeitslosenquote
Alo)ofintotal
% unemployed
Langzeitarbeitslosenquote
Erwerbspersonen)
in %
Long-term unemployed as a(an
share
of the labour force
2005
2006
2007
2008
2009
Source: BA Statistics; Destatis
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Labour Market Effects of the Financial Crisis
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Changes in Real GDP and in employment in Selected OECD countries
- third quarter 2009, compared to previous quarter 0,0
-0,2
-1,0
-1,3
-2,0
-1,2
-1,5
-1,7
-2,0
-2,3
-3,0
-4,0
-4,5
-5,0
-5,4
-6,0
-5,1
-7,0
-8,0
-9,0
-4,8
-4,6
-4,3
-4,0
Growth rate of real GDP, %
Change in employment, %
-7,6
-1,4
-3,7
-4,0
-7,2
-8,7
-10,0
Ireland
Denmark
UK
Germany
Italy
EU
Netherlands
Spain
Austria
USA
Source: OECD
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Madrid, 08.02.2010
Changes in Real GDP and Unemploment Rates in Selected OECD countries
- third quarter 2009, compared to previous quarter 8,0
6,0
Growth rate of real GDP, %
6,8
5,8
Change in unemployment rates,
percentage points
4,0
3,7
2,9
2,2
2,0
1,7
1,6
2,0
0,6
1,0
0,9
0,0
-2,0
-2,6
-4,0
-6,0
-8,0
-5,4
-5,1
-4,8
-4,6
-4,3
-4,0
-4,0
-2,3
-3,7
-7,6
-10,0
Ireland
Denmark
UK
Germany
Italy
EU
Netherlands
Spain
Austria
USA
France
Source: OECD
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Decomposition of Changes in the German Real GDP in 2009
- changes, % 0
-0,1
-1
-2
-2,2
-3
-2,8
-4
-5
-5,0
-6
Productivity per hour
Working hours per year
(Average)
Employment growth
Real GDP
Source: IAB
18
2007
2008
September
August
July
June
May
April
March
February
January
December
November
October
September
August
July
June
May
April
March
February
January
December
November
October
September
August
July
June
May
April
March
February
January
Madrid, 08.02.2010
Development of Short-Time Work in Germany
- thousands, January 2007 until September 2009 -
1.600.000
1.400.000
1.200.000
1.000.000
800.000
600.000
400.000
200.000
0
2009
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Changes in Working Hours per year in Germany, 2009
- yearly averages, changes in hours 10
3,4
0
-10
-10,2
-20
-14,6
-8,4
-13,7
-30
-40
-43,5
-50
weekly working
hours
sickness,
short-time work
holidays, other
components
overtime
working hour
accounts
total
Source: IAB
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Responses of Firms to the Financial Crises 2009
- percentages of all firms -
100%
Entlassung
von Mitarbeitern
dismissals
90%
80%
Kurzarbeit
use of short-time
work
70%
60%
50%
40%
wage cut von
or reduction
Kürzungen
Lohn oder of
Zusatzleistungen,
working time
oder Arbeitszeitreduktion**
cost savings durch
through
Kostensenkung
reorganisation
Umstrukturierung
30%
20%
10%
0%
Erschließen
neuer
Kundenestablishing
new
markets
gruppen
gettingoder
newMärkte
customers
and
Einstellungsstopp
hiring freeze
Source: IAB
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Industrial Relations and Employment
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Strictness of Employment Protection in Selected OECD Countries
- overall level, 2008 3,5
3,05
2,98
3
2,5
2,12
1,87
2
1,93
1,89
1,50
1,43
1,5
1,95
1,11
1
0,5
0,75
0,21
0
US
A
UK
d
lan
rI e
k
an
p
Ja
De
ar
m
n
ed
w
S
en
ly
Ita
A
y
s
ia
tr
us
e
th
Ne
nd
rla
Ge
an
rm
ain
p
S
an
Fr
ce
Source: OECD
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Madrid, 08.02.2010
Trade Union Density
- trade union members as a percentage of wage and salary earners 80
Denmark
70
60
50
40
Austria
30
Germany
20
Spain
10
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
Source: OECD
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Madrid, 08.02.2010
Collective Bargaining in Germany
Proportion of Employees in Firms Covered by Sectoral Agreements, 1996-2008, percentages
Private Sector*, Western Germany
Private Sector*, Eastern Germany
Overall Economy, Western Germany
Overall Economy, Eastern Germany
80
70
66
65
* without Agriculture and Non-Profit Organizations
60
60
60
59
58
57
55
53
52
50
48
50
43
39
40
37
35
35
34
34
33
33
33
30
20
1996
1998
2000
2001
2002
2003
2004
2005
2006
2007
2008
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Collective Bargaining and Financial Crisis
 Altough trade union density and bargaining coverage is
shrinking, collective agreements are still an important point
of reference
 Through wage moderation collective bargaining has
fostered the employment trend during the previous boom
period
 Collective bargaining has become much more flexible
through „opt-out clauses“ and „job pacts“
 The strong use of short-term work in 2009 (on average
about one mill. workers) also indicates a „culture of
maintaining jobs“ and „social partnership“
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Future Challenges
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Decomposition of Changes in the German Real GDP in 2010
- changes, % 3
2,3
Moderate scenario
2
1,4
2,5
1,5
1,2
Optimistic scenario
1
0,5
0
-1
-1,3
-2
-2,1
-3
Productivity per hour
Working hours per year
(Average)
Employment growth
Real GDP
Source: IAB
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Madrid, 08.02.2010
Unemployment and Hidden Labour Force in Germany
- 2000 / 2010, thousands 7.000
Unemployed
Hidden labour force (discouraged workers)
6.000
5.000
697
831
4.000
732
791
782
842
1.002
934
798
Hidden labour force (labour market programmes)
689
770
729
711
578
786
807
611
677
515
569
563
454
3.000
2.000
3.890
3.853
4.061
4.377
4.381
4.861
4.487
3.776
4.121
3.268
3.480
2008
2009
1.000
0
2000
2001
2002
2003
2004
2005
2006
2007
2010
m.V.
Source: IAB
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Madrid, 08.02.2010
Potential Labour Force in Germany 1998-2010
- millions 44,60
44,54
44,50
44,52
44,45
44,44
44,40
44,40
44,30
44,35
44,33
44,30
44,22
44,18
44,20
44,08
44,10
44,03
44,00
43,90
43,80
43,80
43,70
43,60
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: IAB
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Madrid, 08.02.2010
The German Labour Market
- in the medium Term  Decisive question: How far can companies maintain internal
flexibility and how far are employees willing to accept such a
strategy?
 Even if the economy recovers quite soon a period of jobless
growth is very much likely.
 The shrinking labour force takes some of the burden off the
labour market, but may increase skill shortages at the same
time.
31
German Labour Market
Back - up
Dr. Ulrich Walwei
Madrid, 08.02.2010
Economic Growth in International Comparison
- third quarter 2009, compared to previous quarter 0
-1
-2
-3
-2,3
-2,6
-4
-3,7
-4,0
-4,0
-5
-4,3
-4,6
-4,8
-5,1
-5,4
-6
-7
-7,6
-8
ce
n
a
Fr
A
US
a
tri
s
Au
N
ds
n
rla
e
h
et
n
ai
p
S
an
e
p
ro
u
E
n
io
n
U
ly
Ita
G
y
an
m
er
U
te
ni
n
d
Ki
o
gd
k
ar
nm
m
De
nd
la
rI e
Source: OECD
33
Madrid, 08.02.2010
Unemployment Rates in International Comparison
- 09 / 2009, previous year -
20
18,7
September 2008
18
16
September 2009
14
12,2
12
9,6
10
8
7,1
7,8
7,7
8,6
7,8
7,1
6,8
6,3
5,8
5,3
6
3,7
3,6
4
9,7
9,2
7,9
11,9
6,2
6,0
6,4
3,3
2,7
2
0
Germany
Germany
Netherlands
Italy
Austria
France
UK
European
Union
Sweden
Denmark
USA
Ireland
Spain
Source: OECD
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