The Unexpected Appearance of a New German Model

Werner Eichhorst

No 6625, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Most Continental European labour markets and welfare states underwent a substantial transformation over the last two decades moving from a situation of low employment and limited labour market inequality to higher employment, but also more inequality. Germany is a case in point as it exhibits growing employment figures and growing shares of low pay and non-standard work. Furthermore, the German labour market has been remarkably resilient during the recent crisis. How can this be explained? The paper claims that changes in labour market institutions such as unemployment benefits, active labour market policies and employment protection play a major role, but changes in industrial relations at the sectoral level and individual firms' staffing practices are equally important in explaining actual labour market outcomes. Regarding labour market institutions, the pattern found in Germany shows sequences of de- and re-regulatory reforms of employment protection and increasing or decreasing unemployment benefit generosity, both mostly addressing the margins of the labour market, i.e. 'outsiders', and contributing to a growing dualisation of the employment system. The institutional status of 'insiders' was hardly affected by legislative changes. This dualisation trend was reinforced by micro-level dynamics in industrial relations and company employment practices where we can observe growing reliance on mechanisms of internal flexibility for the skilled core work force and increasing use of non-standard types of employment in less specifically skilled occupations.

Keywords: Germany; flexibility; labor market reforms; employment growth; dualisation (search for similar items in EconPapers)
JEL-codes: J21 J31 J52 J68 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2012-06
New Economics Papers: this item is included in nep-eec, nep-eur, nep-iue, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published - published in: British Journal of Industrial Relations, 2015, 53(1), 49-69

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Journal Article: The Unexpected Appearance of a New German Model (2015)
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