German Labour Market

German Labour Market

Successful Labour Relations Models in Europe: the German, Austrian and Danish models

Madrid, 08th Februar 2010

Dr. Ulrich Walwei

2

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


3

Madrid, 08.02.2010

The German Labour Market – Some Basic Facts

4

Madrid, 08.02.2010

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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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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

7

Madrid, 08.02.2010

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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Madrid, 08.02.2010

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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Madrid, 08.02.2010

Labour Market Reform and its Impacts

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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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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Madrid, 08.02.2010

Labour Market Effects of the Financial Crisis

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Madrid, 08.02.2010

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

18

Madrid, 08.02.2010

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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Madrid, 08.02.2010

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

21

Madrid, 08.02.2010

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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Madrid, 08.02.2010

Industrial Relations and Employment

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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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

25

Madrid, 08.02.2010

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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Madrid, 08.02.2010

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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Madrid, 08.02.2010

Future Challenges

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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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

31

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.


Back - upDr. Ulrich Walwei

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Madrid, 08.02.2010

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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Madrid, 08.02.2010

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

Documents

German Labour Market