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Klaus Zimmermann
 

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 Klaus Zimmermann Presentation Transcript

  • Germany’s New Labor Market Miracle Prof. Dr. Klaus F. Zimmermann IZA, DIW Berlin und University of Bonn Stockholm, Sweden March 24, 2009
  • Overview: The German Labor Market
    • High unemployment central problem in reunified Germany
    • This has often been linked to:
      • The high level of employment protection
      • The high labor costs
      • The strictly regulated labor market
    • “ Hartz Reforms” in 2005: policy shift towards activation
    • Economic crisis: Germany’s New Labor Market Miracle
      • Internal flexibility
      • Short-time work
      • Sector-specific crisis
      • Automatic stabilizers
  • Unemployment in Germany (1960-2010) Source: Federal Employment Agency
    • In October 2008 the unemployment dropped under the level of 3 million for the first time since 1992
    • This might be an indication that the fundamental structural problems of the German labor market could have been decisively loosen by the Hartz reforms
    Oil crises German reunification Post-war economic boom Dotcom bubble Hartz reforms
  • 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
  • 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.
  • Germany‘s Reaction to Overcome the Crisis: Demystifying the New Labor Market Miracle
    • Astonishingly mild response of the German labor market to the severe demand shock induced by the crisis
    • Several factors played an important role:
      • Short-time work created scope for buffering capacity within firms
      • Labor market reforms and behavior of social partners
      • Crisis mainly affected export-oriented manufacturing firms, which were engines of growth before the crisis
      • Those firms face a shortage of qualified workers: dismissals would entail a significant loss of firm-specific human capital
      • Firms followed a strategy of massive labor hoarding
    • By contrast, comparatively high employment protection legislation did not play a major role
  • 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)
  • Different Labor Market Impacts of the Crisis
    • What are the underlying reasons for the different labor market impacts across countries?
    • Duration and depths of the crisis
    • Industry structure of the economy (e.g., share of export-oriented or “vulnerable” sectors)
    • Size, timing and structure of discretionary measures (mainly stimulus packages)
    • Labor market institutions, especially labor market regulation, collective bargaining, active and passive labor market policies
  • Share of Vulnerable Sectors in OECD Countries (2007)
  • Sectoral Employment Change in the EU (Q2 2008 – Q2 2009)
  • 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)
  • Discretionary Expansion of ALMP Expenditures (2008-2010) Source: OECD Employment Outlook 2009.
  • Specific German Feature: Working Short-Time to Overcome the Crisis
    • Institutional arrangements:
      • Short-time working benefits: 60 percent of net earnings (67 percent with children)
      • Maximum period of eligibility extended to 24 months (until 2009), now 18 months
      • Social insurance contributions are reimbursed at a rate of 50 percent in the first six months of short-time work
      • Beginning with the seventh month, social insurance contributions are reimbursed at a rate of 100 percent
      • 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)
    • Extensive use of short-time work, especially in export-oriented sectors to maintain highly qualified workforce
  • 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)
  • 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
  • Conclusions (1/3): German Miracle not only Short-time Work
    • In general: working time flexibility, i.e., less overtime, working time accounts (about -4% hours worked)
    • Complementary policies to protect manufacturing: massive expansion of short-time work
    • 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
    • Germany as an „extreme“ case of internal flexibility
    • Not responsible for the swift recovery:
      • Stimulus packages did not start before mid-2009
      • Limited scope of controversial “cash for clunkers” program
  • Conclusions (2/3): Labor Market Institutions and Automatic Stabilizers
    • Countries with existing routines to quickly adjust fare relatively well in times of the crisis:
      • No need for discretionary measures or extensive reforms
      • Automatic stabilizers in tax and transfer system
      • Previous reform efforts (e.g., activation policies)
    • Few policy innovations, but relatively strong parametric adjustments (e.g., extension of short-time work in Germany)
    • No comeback of passive measures so far (e.g., early retirement)
    • No evidence for downsizing ALMP or automatic stabilizers (quite the contrary)
    • “ Flexicurity” still serves as the (European) role model for institutional reforms
  • Conclusions (3/3): Short- and Long-Term Implications of the Crisis
    • 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
      • Internal flexibility in highly regulated labor markets as an adequate short-term measure to keep unemployment low and to sustain qualified workers employed
      • But at a certain point, structural adjustments and labor reallocation are the better alternative (and inevitable)
    • Paying the bill later? Trade-off between short-term stabilization of existing jobs and creation of new jobs
    • Crisis will speed up structural change, at least in the longer run
  • 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