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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 1 The German labour market in a comparative perspective – with special reference to the employment of older persons Presentation for the conference on ‘The European Employment Strategy – Opportunities and Limits for the New Member States' Budapest, 20th October 2005 Susanne Kraatz, Thomas Rhein
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 2 Outline The employment targets of the EES Germany‘s labour market performance East Germany The ageing society and older workers German policy responses The ECE member countries in comparison Age-related employment: the youth and the elderly Conclusions
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 3 Achieving full employment -> Overall employment rate of 70 % Female employment rate of 60 % Older workers‘ employment rate of 50 % - raising the average exit rate by five years Improving quality and productivity at work Strengthening social and territorial cohesion The European Employment Strategy (EES) as Part of the Lisbon Agenda
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 4 Performance of the German Labour Market (1): GermanyEU-15EU-25 Overall rate65.064.763.3 Female rate59.256.855.7 55-6441.842.541.0 15-24 (2003)44.039.736.7 Source: Eurostat Employment rates, 2004
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 5 Overall Employment Rates, 2004, in Comparison Source: Eurostat
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 6 Performance of the German Labour Market (2): GermanyEU-15EU-25 Overall Rate9.58.19.0 Female Rate10.59.310.2 55-6412.86.87.0 15-2415.116.618.6 Source: Eurostat Unemployment rates, 2004
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 7 Slight improvement in terms of (un)employment after 1997, but rising unemployment since 2001 and steady fall in „standard“ (full-time, permanent) jobs Employment rates below EU targets and other EU countries, especially for older workers Situation for younger people still relatively good Unemployment is conceived as the biggest problem of Germany‘s society Performance of the German Labour Market (3):
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 8 Low growth rates High (non-wage) labour costs (social charges) West Germany: 32 €; East Germany: 19 €; Slovenia: 9 €; Slovak Rep.: 3 € (2002) Growing international competition Too much regulation, e.g. employment protection, too generous social benefits (disputed) Problem groups and regions: - East Germany - Older people - Unskilled workers Aspects of German Labour Market Problems
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 9 The East German Labour Market (1): Persistent differences in employment rates…
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 10 The East German Labour Market (2): … and unemployment rates…
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 11 The East German Labour Market (3): … despite massive East-West migration … - More than 3 million East Germans went West since 1989, mainly young people - Net emigration since 1989: more than 1.5 million persons … and huge financial West-East Transfers - Almost 1.3 billion Euros between 1991 and 2003 High female labour force participation Lower wages than in the West… … but also low productivity, apart from some regions - East German GDP per Head at 64.3 % of West level (2004)
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 12 The „Greying“ of the Labour Market Declining birth rates and rising life expectancy… …constitute the big challenge of the future… - not only for Germany, but also for other European countries … and will lead to a shrinking and ageing workforce
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 13 Source:IAB-Kurzbericht No. 11/2005
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 14 Employment of Older Workers (1) Increasing employment of older workers will be crucial to meet the demographic challenge Poor employment performance of older workers also constitutes a threat for financing social security West Germany: „Early-Exit“ Culture since the 70‘s: „Older workers should give way to the youth“ Early exit from working life via different channels: - Pre-retirement, early retirement, unemployment insurance, also in East Germany since the 90‘s
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 15 Employment of Older Workers (2) The Gender aspect: Few younger women working Few older women working - Employment rate 55-64 - male: 48.8%; female: 29.8 % (2004) The skills aspect: Low labour force participation of the low- skilled, who retire early But: Rising awareness (supported by the European Employment Strategy) that the burden of early exit will be too high in the future
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 16 Agenda 2010: A comprehensive reform package (2003) Tax reform: lower rates for all Health care, pension reform:stabilisation of labour burden Family and gender policy:work-life-balance Labour market reforms Proactive concept, simplification and cutbacks in benefits Reorganisation of PES Moderate liberalization Increasing bargaining at company level German Policy Responses... (1)
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 17 German Policy Responses (2): New strategies for older workers Beginning paradigm shift : From early to late(r) exit Pensions: 1. Financial incentives 2. Gradual increase of age for early retirement (unemployment, part time work) = 60 -> 63 Active Labour Market policy: Training, Subsidies for older unemployed New projects Liberalisation of fixed term contracts (52+ instead of 58+) = De facto Liberalisation of dismissal
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 18 German Policy Responses (3): New strategies for older workers Employability: Strategy for Lifelong Learning, INQUA Part-time work for a smooth transition Family policy: To close the gender gap for the future Change of attitudes: Campaign: 50+ - they are competent Pro-age Germany has developed a more comprehensive strategy …
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 19 …but persisting lack of consistency Employers use old age part-time work to reduce jobs. …are not ready to engage older workers. The statedid not close the path of early retirement. did not yet introduce an anti-discrimination law. … as a consequence of economic and political conditions.
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 20 Why „bigbang“ reforms are not possible in Germany: Federalism: Joint-decision trap Frequent elections Coalitions: In the search of stable majorities Party system:The dilemma of „Catch-all“ parties Interest groups: Strong interest groups, lack of consensus Political culture:The loss of confidence
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 21 East Germany (1): What is different from ECE countries? Postulate of equal living conditions -> wages growing faster than productivity. Fast economic, political and social union in 1990 -> breakdown of the East German economic structures. The costful program „Reconstruction East“ -> did not solve structural problems …. new regional disparities between the two halves of Germany.
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 22 East Germany (2) Labour market policy: From special to more equal Responses Special Responses: Transitional allowances and benefits (Re-)training offers Subsidized employment: ABM, SAM Since 2004 only few special measures left (BSI)... smoothing, not solving the problems of unemployment
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 23 East Germany (3): The search for alternative solutions The individuum: Migration, commuting or inactivity. The companies: Less collective agreements. The state:Discussing the model of a special economic zone. … resembles ECE countries
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 24 ECE member Countries (1): Real Growth and GDP per Head LVEELTHUSKPLSICZDE Real GDP 2004 (1995=100) 173172165144 141121113 GDP per Head, 2004 (in Euros, Prices of 1995) 28003600230049004000390010900500026500
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 25 ECE member Countries (2): Employment Rates, 2004
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 26 Frontrunners join or pass (East-)Germany Overall Employment: Czech Republic Older: Baltic States, Czech Republic Unemployment:Hungary and Slovenia …laggards (Poland, Slovakia) are loosing ground. Even greater heterogeneity concerning older workers: Apparently following the international pattern: The stronger the labour market, the better the chances for all. ECE member Countries (3): Increasing heterogeneity
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 27 ECE member Countries (4): Youth employment as a Challenge The youth employment rate 2004: Frontrunners-> Latvia (31 %), Czech Republic (30%) Estonia and Slovenia (29 %) Laggards -> Poland (21 %) and Lithuania (22 %) … Is much lower than in East Germany (44 %). … higher employment rate of older does not harm the chances of the young.
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 28 Strategies for older workers in ECE Countries (1) A glance at the Czech Republic and Estonia: Reforming the pensions was crucial. The often underestimated role of Gender Active Labour Market Policies: Discrimination of older unemployed Employability and „soft measures“ –> Comprehensive action plans most of the implementation to come.
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 29 Strategies for older workers in ECE Countries (2): Similarities and differences Similar solutions, similar risk as in (East-)Germany: One-sided instead of comprehensive practice Differences: Etatism bears problems of implementation Networking across levels and actors has to be evolved
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 30 Strong differences in GDP per capita between ECE countries and Germany… … but catching-up is under way (new „Celtic Tigers“?) ECE countries are far from being a homogeneous group East Germany: financial transfers and labour emigration are not sufficient to overcome the transformation crisis Conclusions (1)
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Institut für Arbeitsmarkt- und Berufsforschung (Institute for Employment Research) Bundesagentur für Arbeit (Federal Employment Agency, Germany) 31 Some assets of ECE member countries: Labour costs are low Less regulation of the labour market Political structures are less sclerotic Elite consensus about Europeanization Common challenges: - Low employment rates, high unemployment (not everywhere!) - Ageing society Need for a lifecycle approach to work, as proposed by the Employment Guidelines of the EU - Comprehensive approach towards employment of older workers is needed Conclusions (2)
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