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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
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Madrid, 08.02.2010
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
German Labour Market
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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 -
2,0 2,0
3,2
1,2
0
-0,1
1,20,8
3,2
2,5
1,3
-5,0-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
1,0
2,0
3,0
4,0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Destatis
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Employment Rates 1998 - 2008- percentages -
50,0
55,0
60,0
65,0
70,0
75,0
80,0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Denmark
Austria
Spain
EU-27
EU-15
Germany
Source: Eurostat
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Unemployment Rates 1998 - 2008- percentages -
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Spain
Austria
Denmark
EU-15
Germany
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
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:• Stronger permeability of the labour market
Expected effect:• Improved matching• Intensive job search
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Employment Trends during different Boom Periods- changes in % -
6,6
3,7
0,6
2,5
7,0
3,73,4
4,9
0
1
2
3
4
5
6
7
8
Real GDP Total Employment Total Hours Employment covered bysocial security
Boom period 1998 / 2001Boom period 2005 / 2008
Source: Destatis, IAB
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Beveridge-Kurve, Januar 1992 bis Februar 2009
Bemerkungen: Saisonbereinigte Monatswerte (ohne irreguläre Komponente). Quelle: BA, IAB.
Matching Efficiency- Beveridge-Curve: Registered Vacancies and Unemployed 1992 to 2009 -
Reg
iste
red
vaca
ncie
s (t
hou
sand
s)
Total unemployed (thousands)
Source: BA, IAB
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Labour Market Reform: More acceptance of lower wages- Findings from an establishment survey -
Source: Vacancy Survey of the IAB
increased decreased difference
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Source: BA Statistics; Destatis
Long-Term Unemployment Rates (1998-2009)
0,00
5,00
10,00
15,00
20,00
25,00
30,00
35,00
40,00
45,00
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
LZA an allen Alo LZA in % der EP
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
10,00
Langzeitarbeitslosenquote (an Alo) in %
Langzeitarbeitslosenquote (an Erwerbspersonen) in %
Long-term unemployed as a share of total unemployed
Long-term unemployed as a share of the labour force
Long-term unemployed as a share of total unemployed
Long-term unemployed as a share of the labour force
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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 -
-5,4-5,1
-4,8 -4,6-4,3
-4,0-3,7
-2,3
-8,7
-7,2
-4,0
-7,6
-1,4-1,2-1,5
-2,0
-1,3
-0,2
-1,7
-4,5
-10,0
-9,0
-8,0
-7,0
-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
Ireland Denmark UK Germany Italy EU Netherlands Spain Austria USA
Growth rate of real GDP, %Change in employment, %
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 -
-7,6
-5,4 -5,1 -4,8 -4,6 -4,3 -4,0 -4,0 -3,7
-2,6 -2,3
5,8
2,9
2,0
0,61,0
2,2
0,9
6,8
1,6
3,7
1,7
-10,0
-8,0
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
Ireland Denmark UK Germany Italy EU Netherlands Spain Austria USA France
Growth rate of real GDP, %
Change in unemployment rates,percentage points
Source: OECD
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Decomposition of Changes in the German Real GDP in 2009- changes, % -
-2,2
-2,8
-0,1
-5,0
-6
-5
-4
-3
-2
-1
0
Productivity per hour Working hours per year(Average)
Employment growth Real GDP
Source: IAB
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Madrid, 08.02.2010
Development of Short-Time Work in Germany - thousands, January 2007 until September 2009 -
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
1.600.000
Jan
ua
ry
Fe
bru
ary
Ma
rch
Ap
ril
Ma
y
Jun
e
July
Au
gu
st
Se
pte
mb
er
Oct
ob
er
No
vem
be
r
De
cem
be
r
Jan
ua
ry
Fe
bru
ary
Ma
rch
Ap
ril
Ma
y
Jun
e
July
Au
gu
st
Se
pte
mb
er
Oct
ob
er
No
vem
be
r
De
cem
be
r
Jan
ua
ry
Fe
bru
ary
Ma
rch
Ap
ril
Ma
y
Jun
e
July
Au
gu
st
Se
pte
mb
er
2007 2008 2009
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Changes in Working Hours per year in Germany, 2009 - yearly averages, changes in hours -
-14,6
3,4
-13,7-10,2 -8,4
-43,5-50
-40
-30
-20
-10
0
10
weekly workinghours
sickness,holidays, othercomponents
short-time work overtime working houraccounts
total
Source: IAB
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Responses of Firms to the Financial Crises 2009- percentages of all firms -
Source: IAB
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Entlassung von Mitarbeitern
Kurzarbeit
Kürzungen von Lohn oderZusatzleistungen,oder Arbeitszeitreduktion**
Kostensenkung durchUmstrukturierung
Erschließen neuer Kunden-gruppen oder Märkte
Einstellungsstopp
dismissals
use of short-time work
hiring freeze
establishing new markets and getting new customers
wage cut or reduction of working time
cost savings through reorganisation
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Industrial Relations and Employment
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Strictness of Employment Protection in Selected OECD Countries- overall level, 2008 -
0,21
0,75
1,11
1,43 1,50
1,87 1,89 1,93 1,952,12
2,98 3,05
0
0,5
1
1,5
2
2,5
3
3,5
Source: OECD
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Trade Union Density - trade union members as a percentage of wage and salary earners -
0
10
20
30
40
50
60
70
80
1999 2000 2001 2002 2003 2004 2005 2006 2007
Denmark
Austria
Germany
Spain
Source: OECD
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Collective Bargaining in GermanyProportion of Employees in Firms Covered by Sectoral Agreements, 1996-2008, percentages
66
43
3937
59
35 35 34
5553
33 33
48
65
5857
60
34 33
60
5250
20
30
40
50
60
70
80
1996 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008
Private Sector*, Western Germany Private Sector*, Eastern Germany Overall Economy, Western Germany Overall Economy, Eastern Germany
* without Agriculture and Non-Profit Organizations
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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, % -
1,41,2
-2,1
0,5
2,3
1,5
-1,3
2,5
-3
-2
-1
0
1
2
3
Productivity per hour Working hours per year(Average)
Employment growth Real GDP
Moderate scenario
Optimistic scenario
Source: IAB
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Unemployment and Hidden Labour Force in Germany - 2000 / 2010, thousands -
3.890 3.853 4.061 4.377 4.3814.861
4.4873.776
3.268 3.4804.121
831 791807
1.002 934729
711
611
515454
563
697 732798
782 842689
770
786
677 569
578
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 m.V.
Unemployed Hidden labour force (discouraged workers) Hidden labour force (labour market programmes)
Source: IAB
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Potential Labour Force in Germany 1998-2010- millions -
43,80
44,03
44,18
44,3044,33
44,4044,44
44,54 44,52
44,45
44,35
44,22
44,08
43,60
43,70
43,80
43,90
44,00
44,10
44,20
44,30
44,40
44,50
44,60
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: IAB
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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.
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German Labour Market
Back - upDr. Ulrich Walwei
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Economic Growth in International Comparison - third quarter 2009, compared to previous quarter -
-2,3-2,6
-3,7-4,0 -4,0
-4,3-4,6 -4,8
-5,1-5,4
-7,6-8
-7
-6
-5
-4
-3
-2
-1
0
Source: OECD
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Unemployment Rates in International Comparison - 09 / 2009, previous year -
7,1
2,7
6,8
3,7
7,9
5,8
7,16,3
3,3
6,06,4
11,9
7,7
3,6
7,8
5,3
9,6
7,8
9,28,6
6,2
9,7
12,2
18,7
0
2
4
6
8
10
12
14
16
18
20
Germany Netherlands Italy Austria France UK EuropeanUnion
Sweden Denmark USA Ireland SpainGermany
Source: OECD
September 2008
September 2009