Klaus Zimmermann


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  • 2005: erstmalige Erfassung von erwerbsfähigen früheren Sozialhilfeempfängern – statistischer Effekt – neue Ehrlichkeit/ vorher: Messung der AL nach dem Konzept der internationalen Arbeitsagentur (ILO) – wurde als Scheitern der Regieurungspolitik wahrgenommen 2006 verbesserte sich die Entwicklung auf dem AM deutlich (wegen Konjunktur aber vielmehr strukturelle Reformen in Sozialstaat und AMP
  • Klaus Zimmermann

    1. 1. Germany’s New Labor Market Miracle Prof. Dr. Klaus F. Zimmermann IZA, DIW Berlin und University of Bonn Stockholm, Sweden March 24, 2009
    2. 2. Overview: The German Labor Market <ul><li>High unemployment central problem in reunified Germany </li></ul><ul><li>This has often been linked to: </li></ul><ul><ul><li>The high level of employment protection </li></ul></ul><ul><ul><li>The high labor costs </li></ul></ul><ul><ul><li>The strictly regulated labor market </li></ul></ul><ul><li>“ Hartz Reforms” in 2005: policy shift towards activation </li></ul><ul><li>Economic crisis: Germany’s New Labor Market Miracle </li></ul><ul><ul><li>Internal flexibility </li></ul></ul><ul><ul><li>Short-time work </li></ul></ul><ul><ul><li>Sector-specific crisis </li></ul></ul><ul><ul><li>Automatic stabilizers </li></ul></ul>
    3. 3. Unemployment in Germany (1960-2010) Source: Federal Employment Agency <ul><li>In October 2008 the unemployment dropped under the level of 3 million for the first time since 1992 </li></ul><ul><li>This might be an indication that the fundamental structural problems of the German labor market could have been decisively loosen by the Hartz reforms </li></ul>Oil crises German reunification Post-war economic boom Dotcom bubble Hartz reforms
    4. 4. Evolution of the German Labor Force (1992-2007) Source: GSOEP Decrease in the share of permanent full-time employment Decrease in the share of inactive individuals Growth of flexible jobs
    5. 5. Unit Labor Costs Across Countries (1990-2008, 2000=100) Germany’s international competitiveness has increased substantially ►relatively strong position when crisis hit Germany Source: OECD.
    6. 6. Germany‘s Reaction to Overcome the Crisis: Demystifying the New Labor Market Miracle <ul><li>Astonishingly mild response of the German labor market to the severe demand shock induced by the crisis </li></ul><ul><li>Several factors played an important role: </li></ul><ul><ul><li>Short-time work created scope for buffering capacity within firms </li></ul></ul><ul><ul><li>Labor market reforms and behavior of social partners </li></ul></ul><ul><ul><li>Crisis mainly affected export-oriented manufacturing firms, which were engines of growth before the crisis </li></ul></ul><ul><ul><li>Those firms face a shortage of qualified workers: dismissals would entail a significant loss of firm-specific human capital </li></ul></ul><ul><ul><li>Firms followed a strategy of massive labor hoarding </li></ul></ul><ul><li>By contrast, comparatively high employment protection legislation did not play a major role </li></ul>
    7. 7. GDP and Employment Decline in OECD Countries Source: OECD Main Economic Indicators, own calculations. GDP and employment decline since start of crisis (country-specific GDP-based turning points)
    8. 8. Different Labor Market Impacts of the Crisis <ul><li>What are the underlying reasons for the different labor market impacts across countries? </li></ul><ul><li>Duration and depths of the crisis </li></ul><ul><li>Industry structure of the economy (e.g., share of export-oriented or “vulnerable” sectors) </li></ul><ul><li>Size, timing and structure of discretionary measures (mainly stimulus packages) </li></ul><ul><li>Labor market institutions, especially labor market regulation, collective bargaining, active and passive labor market policies </li></ul>
    9. 9. Share of Vulnerable Sectors in OECD Countries (2007)
    10. 10. Sectoral Employment Change in the EU (Q2 2008 – Q2 2009)
    11. 11. Automatic Stabilizers: Wide Differences Across the EU Stabilization of demand after a 5% income shock or 5 PP rise in unemployment Source: Dolls et al. (2009)
    12. 12. Discretionary Expansion of ALMP Expenditures (2008-2010) Source: OECD Employment Outlook 2009.
    13. 13. Specific German Feature: Working Short-Time to Overcome the Crisis <ul><li>Institutional arrangements: </li></ul><ul><ul><li>Short-time working benefits: 60 percent of net earnings (67 percent with children) </li></ul></ul><ul><ul><li>Maximum period of eligibility extended to 24 months (until 2009), now 18 months </li></ul></ul><ul><ul><li>Social insurance contributions are reimbursed at a rate of 50 percent in the first six months of short-time work </li></ul></ul><ul><ul><li>Beginning with the seventh month, social insurance contributions are reimbursed at a rate of 100 percent </li></ul></ul><ul><ul><li>Training measures for employees receive considerable financial support during short-time work (e.g., social insurance contributions are reimbursed at a rate of 100 percent) </li></ul></ul><ul><li>Extensive use of short-time work, especially in export-oriented sectors to maintain highly qualified workforce </li></ul>
    14. 14. Stock of Short-time Workers in Germany (2007-2009) Source: Federal Employment Agency About 4% of all employees, 11% in manufacturing, 20% in car industry, about 350.000 FTE ( ~ 1PP unemployment rate)
    15. 15. Aggregate Working Hours in Germany (1998-2009) Aggregate working hours (in billions per year) Source: Arbeitskreis “Erwerbstätigenrechnung des Bundes und der Länder”. Internal flexibility in the German labor market: less overtime, working time accounts, short-time work
    16. 16. Conclusions (1/3): German Miracle not only Short-time Work <ul><li>In general: working time flexibility, i.e., less overtime, working time accounts (about -4% hours worked) </li></ul><ul><li>Complementary policies to protect manufacturing: massive expansion of short-time work </li></ul><ul><li>Job losses concentrated at flexible margin of manufacturing (temporary agency work -20% in 2008/09, compared to -4% in other manufacturing jobs) while firms are still reluctant to dismiss skilled labor force </li></ul><ul><li>Germany as an „extreme“ case of internal flexibility </li></ul><ul><li>Not responsible for the swift recovery: </li></ul><ul><ul><li>Stimulus packages did not start before mid-2009 </li></ul></ul><ul><ul><li>Limited scope of controversial “cash for clunkers” program </li></ul></ul>
    17. 17. Conclusions (2/3): Labor Market Institutions and Automatic Stabilizers <ul><li>Countries with existing routines to quickly adjust fare relatively well in times of the crisis: </li></ul><ul><ul><li>No need for discretionary measures or extensive reforms </li></ul></ul><ul><ul><li>Automatic stabilizers in tax and transfer system </li></ul></ul><ul><ul><li>Previous reform efforts (e.g., activation policies) </li></ul></ul><ul><li>Few policy innovations, but relatively strong parametric adjustments (e.g., extension of short-time work in Germany) </li></ul><ul><li>No comeback of passive measures so far (e.g., early retirement) </li></ul><ul><li>No evidence for downsizing ALMP or automatic stabilizers (quite the contrary) </li></ul><ul><li>“ Flexicurity” still serves as the (European) role model for institutional reforms </li></ul>
    18. 18. Conclusions (3/3): Short- and Long-Term Implications of the Crisis <ul><li>Countries which fare relatively well so far in terms of the unemployment impact of the crisis are not necessarily the countries that fare best in the medium and long run </li></ul><ul><ul><li>Internal flexibility in highly regulated labor markets as an adequate short-term measure to keep unemployment low and to sustain qualified workers employed </li></ul></ul><ul><ul><li>But at a certain point, structural adjustments and labor reallocation are the better alternative (and inevitable) </li></ul></ul><ul><li>Paying the bill later? Trade-off between short-term stabilization of existing jobs and creation of new jobs </li></ul><ul><li>Crisis will speed up structural change, at least in the longer run </li></ul>
    19. 19. Prof. Dr. Klaus F. Zimmermann IZA, DIW Berlin und Universität Bonn IZA, P.O. Box 7240, 53072 Bonn, Germany Phone: +49 (0) 228 - 38 94 - 0 Fax: +49 (0) 228 - 38 94 - 180 E-Mail: [email_address] www.iza.org