Tremplin Skills Mismatches and the Role of VET The German National Report IBW-Euroinstitut Contents 1. Introduction... 2 2. The German Labour Market... 2 2.1 Employed population according to economic sectors... 2 2.2 Level of employment according to economic sectors and German states (Bundeslaender)... 3 2.3 Level of employment in the German states according to gender... 3 2.4 Employed population in Germany according to position in jobs and qualification (April 1998)... 4 3. Demand and supply... 5 3.1 Type and structure of unemployment in Germany... 5 3.2 Education and Skills... 5 3.3 The openness of education... 6 3.4 Advantage of qualification... 6 3.5 Skills and integration... 6 3.6 Vocational training and vacancies... 6 3.7 Employment: Unemployed population/ vacancies/ short-time workers in the German states (Bundeslaender)... 7 3.8 AGRO-FOOD Agriculture in Germany... 7 3.9 Agriculture... 8 4. Provision of education and training... 8 4.1 Level of education of the German population... 8 4.2 Further education in Germany... 9 4.3 Support of vocational training and promotion... 9 5. Recommendations and government initiatives to address the skills problem... 10 5.1 Modernisation of the vocational training system... 10 5.2 Instruments of and measurements by the government... 11 5.2.1 The Bündnis für Arbeit ( Coalition for Work )... 11 5.2.2 Reform of job creation incentive laws... 14 5.2.3 Low income employment the 630-DM-Jobs... 14 5.2.4 Other measures... 15 5.2.5 The Hartz-Kommission... 16 6. Expert opinion (based on your expert interviews to be carried out post Münster)... 17 1
7. Summary and conclusions from initial research... 18 Statistical Appendix...20 Manufacturing Industry... 20 External Trade... 21 Public Health System... 21 Education and Science... 22 Resources... 23 Useful websites... 24 Relevant bodies providing information on the labour market and the economy... 25 1. Introduction The German economy is experiencing a time wit low growth rates and a steadily growing overall unemployment level. The political change in 1998 when a social-democrat-green government coalition succeeded to a conservative-liberal government coalition gave rise to cautious economic optimism. The close draw of the 2002 election and the re-election of the social-democrat-green government could not halter the economic recession. Scandals revealing corruption in the financing of political parties, growing unemployment, more and higher taxes and incessantly growing social security costs reinforced the economic depression. Several international studies marked the German health system as expensive and ineffective, the schools received very medium grades. All these factors contributed to a feeling of distrust towards the government and passive opposition of the population to government initiatives. 2. The German Labour Market 2.1 Employed population according to economic sectors The labour market is traditionally divided into three sectors: Primary sector: agriculture, forestry, fishery Secondary sector: producing industry Tertiary sector: trade and traffic / service sector Changes in the methods of production, growing automation, rationalisation measures and variation of consumer demands on the service sector have led to a redistribution of the employed population. In the last 20 years, the employment rate in the primary sector has dropped from 9.1% to 2.9%. In 1950, about 23.3% had been employed in the same sector. By contrast, the number of people employed in the tertiary sector has risen sharply from 33.6% in 1950 to 43.6% in 1970 to about 63.3 % in 1998. Table 1: Branch of economic activity Employed population Employed population Employed population in 1950 in 1970 in 1998 Agriculture, forestry, fisheries 23.3 % 7.5 % 2.9% Producing industries 43 % 48.9 % 33.8% Trade and traffic 14.4 % 17.9 % 22.9 % Service sector 19.2 % 25.7 % 40.4 % 2
2.2 Level of employment according to economic sectors and German states (Bundeslaender) When looking at the rate of employment in the various economic sectors and considering each state accordingly, additional differences are to be noticed. In the eastern states, the producing industries are not as well developed as in the big western states. Small states such as Berlin, Bremen or Hamburg tend to have strong trade, hospitality and service sector compared to their producing industries. Table 2: Percentage of employment in each sector* Agriculture, Producing Trade, hospitality, forestry, fisheries industries traffic Other services 1000 s 1000 s 1000 s 1000 s Year/month/date May 2000 Germany 987 12 102 8 417 15 097 Baden-Württemberg 118 1 999 952 1 841 Bavaria 221 2 097 1 312 2 248 Berlin 8 312 338 813 Brandenburg 49 338 277 480 Bremen / 70 88 118 Hamburg 7 167 235 390 Hessen 45 839 673 1 194 Mecklenburg-Vorpommern 49 213 201 318 Niedersachsen 120 1 069 851 1 380 Nordrhein-Westfalen 127 2 545 1 751 3 181 Rheinland-Pfalz 55 624 418 712 Saarland / 147 106 192 Sachsen 56 660 403 789 Sachsen-Anhalt 44 339 250 432 Schleswig-Holstein 42 299 327 570 Thüringen 39 384 234 439 * Klassifikation der Wirtschaftszweige, Ausgabe 1993 (WZ93), Tiefengliederung für den Mikrozensus. 2.3 Level of employment in the German states according to gender To what extent the gender of the employees is concerned, it is to be mentioned that the number of female labour force is only about 70% - 80% of the male labour force. This ratio can be found in all states of Germany. Table 3: Employed Population Total* Male Female 1000 s 1000 s 1000 s Year/month/date May 2000 Germany 36 604 20 680 15 924 Baden-Württemberg 4 910 2 779 2 131 Bavaria 5 879 3 308 2 571 Berlin 1 471 788 683 Brandenburg 1 145 628 516 Bremen 280 154 125 Hamburg 799 435 363 Hessen 2 751 1 558 1 194 Mecklenburg-Vorpommern 780 435 346 Niedersachsen 3 420 1 961 1 459 Nordrhein-Westfalen 7 605 4 396 3 209 Rheinland-Pfalz 1 809 1 040 768 Saarland 450 260 190 Sachsen 1 908 1 043 865 Sachsen-Anhalt 1 064 590 474 Schleswig-Holstein 1 238 700 537 Thüringen 1 095 603 492 * Results of the Mikrozensus 3
Table 4: Employed Population according to gender and job position (April 1998) Job position Men Women Workers including trainees 42,3 23,7 Employees including trainees 36,4 63,2 Civil servants 8,2 4,7 Self-employed 12,7 6,4 Employees from within the family 0,4 1,9 The structure of employment in Germany has changed radically. Today, the share of employees as well as that of workers from within the family has dropped. The sector of self-employed is subject to change continuously. Only the number of civil servants has steadily been on the increase. About 40 million people were able to work in Germany in 1997, 34 million of which actually were employed. 14.4 million worked in the producing industry, 6.7 million in trade and traffic, 6.5 million in the service sector and 1.4 million were employed in the forestry and agricultural sector. 29 million workers were employed in enterprises, 7.3 million worked for the public or private service industry. In 1996 about 3.1 million women and men were self-employed, including those workers from within the family (excluding agriculture). Most self-employed are to be found in the services sector, followed by trade and traffic. In both sectors half of the employed are women. Further branches of employment are the producing industry, agriculture, building trade, traffic and communication industry Most freelancers are working as physicians, lawyers or tax advisers followed by those who have a job in the cultural sector, architects and dentists. German economy has been undergoing a rapid change in the last years. Progress has been made and the fast growing information and communication technologies have created a new image in the economy worldwide. The traditional industrial sector is faced with major problems in recruiting labour and many jobs remain vacant. On the other hand, experts see good chances in the service sector and especially in information, advertising, management and medical care branches. The number of women working today in Germany has risen sharply and almost 40% of the employed population are women. The service sector and part-time jobs are typical female domains, but with the level of unemployment being on the increase, the share of employed women has started to drop as well. There is no denying the fact that noticeably more women than men are unemployed. 2.4 Employed population in Germany according to position in jobs and qualification (April 1998) The position in the working world is highly dependent on the qualification of the employees. Selfemployed people or civil servants tend to have a university degree or another kind of higher qualification than those working in a different sector. Traditional workers usually have gained qualification by apprenticeship or vocational training. Table 5: Job position Total 1,000 Schooling and training % University degree % Self-employed 3,594 41.1 44.2 Supporting members of the family 388 47.6 11.6 Civil servants 2,406 33.9 55.6 Employees 17,172 55.3 30.1 Workers 12,300 64.7 5.1 Total 35,860 55.6 24.5 4
3. Demand and supply 3.1 Type and structure of unemployment in Germany Four different types of unemployment can be distinguished in Germany: Structural unemployment, caused by changing patterns in economy and society, e.g. through introduction of microelectronics and ICT. Deficiency-of-demand unemployment/cyclical unemployment according to changes of economic demand on the market. Seasonal unemployment in branches and jobs dependent on weather conditions (tourism, building trade ) Frictional unemployment in times of short-term transitional problems The structures of unemployment are interconnected to age, sex, qualification and duration of employment/unemployment. Problem clusters among the unemployed are young people without qualification, women, older people, foreign workers and people with disabilities. Due to having been longer employed than others, older employees basically have a less high risk of losing their jobs (protection against dismissal). Once they have been dismissed though, they will find it much harder to find a new job than younger people do. Women are affected by unemployment more than men are, especially those under the age of 30. The situation of the labour market makes is extremely hard for foreign workers to find a job. In the past they were welcomed as so called immigrant workers. Nowadays, there is a huge lack of jobs for them. Those among the problem clusters without any qualification are worst affected. On the other hand, a good level of education and job qualification does not necessarily mean that finding a job would be easy. Table 6: Unemployed people according to type of occupational training and qualification Occupational training Number % Without completed occupational training 1,531,035 38.6 With completed occupational training 2,434,293 61.4 Industrial training 2,013,569 50.8 Technical college 222,425 5.6 Technical college (university status) 56,047 1.4 University 142,252 3.6 Total 3,965,328 100 Table 7: Unemployed population and duration of unemployment 1992-1998 Year Less than 3 months More than Unemployed /September 3 months up to 1 year 1 year 1992 2,894,178 35.1% 39.1% 25.8% 1993 3,447,070 32.7% 39.7% 27.6% 1994 3,493,319 29.9% 36.9% 33.2% 1995 3,521,044 31.9% 36.1% 31.9% 1996 3,848,449 30.7% 38.2% 31.1% 1997 4,308,094 28.8% 37.1% 34.1% 1998 3,965,328 30.6% 32.7% 36.7% In September 1998 about 1.45 million people in Germany had been unemployed for at least one year. 737,200 had been unemployed for at least two years. The share of people without employment for less than three months dropped from 35.1% to 30.6 %. 3.2 Education and Skills Once people have decided on a certain way to gain education and qualification, this decision usually taken at an early stage can hardly be revised and determine the future changes in the job and 5
concerning living standards. School certificates prepare for certain kinds of vocational training, and a successfully finished apprenticeship is the basis for further development into positions with higher incomes and status. A long-term trend towards higher qualification is to be noticed, which both devaluates less high standards and reduces the chances of getting a job for workers without any qualification at all. Certified qualification as well as individual skills are becoming inevitable for starting up into a profession and are essential for promotion. 3.3 The openness of education Ideally, education is measured by a performance-oriented model of equal opportunities. By expanding the demand for education, the level of qualification is to be lifted and people should be able to attend classes at high quality schools more easily. Still, social background determines the educational background. Children of civil servants in higher positions, e.g., tend to go to university to obtain a degree. By contrast, members of working class families usually make an apprenticeship. Children of workers without any qualification often do not obtain a qualification themselves. 3.4 Advantage of qualification Individual chances on the labour market are highly dependent of personal education and training. On the other hand, a high level of education does not protect against unemployment. In addition, a high standard of qualification does not necessarily mean that there could not be any problems to find a job. 3.5 Skills and integration A high level of education and a certified vocational training can be seen as the most important factors for integration into society. Especially ICT and language skills are taken for granted among higher classes and the young population 1. 3.6 Vocational training and vacancies Due to the fast growing service industry, it is recommended to look for jobs in this sector and especially in the ICT sector. Germany suffers from an extremely high shortage of specialist staff. Consequently, experts from abroad are needed to fill vacant jobs. Another sector with a huge demand of labour force is the medical sector, but demand and payment are in bad disproportion. Moreover, this mismatch can be seen as the major reason why so many jobs stay vacant. In addition to this shortage of staff, there are hardly any volunteers left. More and more women tend to be employed and many social tasks remain undone. Generally speaking, growing demands concerning the labour market are to be noticed. For those who want to be successful, further education and training are a must. Unfortunately, the enterprises only rarely pay for this need, and therefore employees themselves have to pay for their education individually. Thus, this financial barrier often cannot be broken. As far as this issue is concerned, Germany still needs to do something about it. Enterprises have to be made aware of the demand for further education. They should not just see the cost for it, but the many positive and profitable advantages. For example, employees who have broadened their experience and skills in ICT through classes are able to work more efficiently and could work as specialist staff. 1 Sources:(pages 1 7): Datenreport 1999 ; Wirtschaft Deutschland; Bundeszentrale für politische Bildung; Statistisches Bundesamt Wiesbaden 6
3.7 Employment: Unemployed population/ vacancies/ short-time workers in the German states (Bundeslaender) Table 8: Labour Market Unemployed Short-time Rate* Vacancies population workers Number % Number Year/Month/Date December 2000 Germany 3 888 652 9.6 513 963 86 052 Baden-Württemberg 281 403 5.4 85 281 8 086 Bavaria 339 387 5.5 96 337 7 146 Berlin 264 749 15.8 6 787 4 120 Brandenburg 226 389 17.0 6 474 4 318 Bremen 41 128 13.0 5 088 708 Hamburg 74 655 8.9 11 272 895 Hessen 214 875 7.3 37 527 5 156 Mecklenburg-Vorpommern 162 998 17.8 7 579 2 240 Niedersachsen 350 829 9.3 48 560 7 721 Nordrhein-Westfalen 777 617 9.2 107 725 22 112 Rheinland-Pfalz 138 337 7.3 31 146 2 446 Saarland 47 767 9.8 5 576 1 829 Sachsen 387 774 17.0 20 455 7 885 Sachsen-Anhalt 272 801 20.2 11 136 4 295 Schleswig-Holstein 114 334 8.5 15 577 3 219 Thüringen 193 610 15.4 13 967 3 875 * Unemployed population among the civil employees In 2000, the rate of unemployment in Germany was as high as 9.6%. That is, about 3.888.652 people were unemployed. The rate differs massively in the different regions. In the rich southern states such as Bavaria and Baden-Wuerttemberg only 5% were unemployed. Whereas the rate of unemployment is up to 20% in the so-called Neue Länder, the former GDR. Thus, there is both a north-south and a west-east divide 2. 3.8 AGRO-FOOD Agriculture in Germany Agriculture is a major economic factor in Germany, especially in the Muensterland. At the moment, there are 460,000 enterprises with an annual production worth 32 billion Euro. As a consequence of the bad economic situation and problems to find successors, a huge decrease of farms can be noticed in the last years. Governmental policy and too much red tape are making it even more difficult for the farmers to survive. More than 4.3 million people are either directly employed in the agricultural sector or work in dependent industries. The 460,000 farms are producing a total turnover worth 47 billion Euro. German agriculture covers 90% of its consumer demands, and therefore only 10% need to be imported. According to a survey, German farmers are the most pessimistic about their economic future. 42% of those asked are expecting a negative development of their enterprises. Although the production is satisfying, the agricultural policy in Germany needs to be more trade-oriented. It is this political lack that is responsible for investment in this sector being 50% down. The number of people who start working in the agricultural sector has continuously been on the decrease. In the economic year 2000/2001, German farmers produced animal and vegetal goods worth 52.1 billion Euro: Dairy products: 9.0 billion Euro about 20% of the total turnover Grain: 7.3 billion Euro Pig-breeding: 6 billion Euro Forage plants/crop 4.5 billion Euro Cattle farming: 3 billion Euro 2 Source: Statistisches Bundesamt Wiesbaden 7
Vegetal production: 22,3 billion Euro dramatic decrease of potato and wine production Only 3% of these products are organic. 3.9 Agriculture The agricultural sector in Germany is like in most countries of the European Union on the decrease. Nonetheless, Germany is able to produce 90% of the goods its consumers demand. Bavaria is especially important, followed by Baden-Wuerttemberg, Lower Saxony and Northrhine-Westfalia. Table 9: Enterprises, Labour force, Cultivation Agricultural Agricultural Area used for enterprises* workers cultivation* Arable land Number 1000 1 000 ha Year/month/date 1999 April 1999 2000 Germany 471 960 1 436 17 067 11 804 Baden-Württemberg 75 850 245 1 463 839 Bavaria 154 189 426 3 279 2 092 Berlin 103. 2 1 Brandenburg 7 008 40 1 347 1 044 Bremen 252. 9 2 Hamburg 1 262. 14 6 Hessen 29 669 83 762 486 Mecklenburg-Vorpommern 5 176 28 1 367 1 082 Niedersachsen 65 650 184 2 628 1 790 Nordrhein-Westfalen 56 366 139 1 492 1 060 Rheinland-Pfalz 35 475 123 716 401 Saarland 2 066 6 77 39 Sachsen 7 968 45 918 726 Sachsen-Anhalt 5 100 28 1 170 1000 Schleswig-Holstein 20 706 56 1 023 610 Thüringen 5 120 28 803 625 * Farms with at least 2 ha of area used for agriculture or with special cultivation or animal population, if a certain minimum size can be achieved or exceeded. Workers from within the family or workers from the outside in those farms mentioned above. 4. Provision of education and training 4.1 Level of education of the German population Qualification and level of education of the people are of high general importance for the overall economic situation of a country. That is, human capital is a major factor for the national economy. As far as the individual is concerned, being qualified results in self-fulfilment and further development of their characters. A survey from 1998 showed that more than half of the population (56.7%) from the group of 20 to 30 year olds had higher school qualifications. Only 19.4 % of people older than 60 years were in possession of a similar qualification. Thus, the number of people with higher qualification has risen sharply in the last years. The same survey showed that more than 50% of those asked had successfully finished an apprenticeship. On the other hand, only 10% had obtained a degree at university. As for gender related criteria, no mismatch can be noticed in Germany any longer. Just an example: Whereas about 30.8% of men and 35.1% of women among the 20 to 24 year olds had finished their school career with their A-levels, only 20.6% of men and 12.4% of women among the 50-54 year olds had obtained a similar qualification (1998 survey). 8
In this connection, two trends are to be recognized. First, more and more people tend to have higher secondary school qualifications (A-level instead of GSCE). Second, the share of women has risen disproportionately, and thus we are able to talk of equality on the labour market today. Source: Mikrozensus aus dem Jahr 1998 4.2 Further education in Germany Most of the people in Germany have recognized the need for life-long learning by now. Continuous progress and changes in technology have made it impossible for workers to stay in their jobs until they have reached retirement age. Apart from having a secure job, the success of the enterprise almost forces the employees to go into life-long further education. Consequently, further training has been on the increase for several years. People are more often attending evening classes or university courses. The ministry of education, science, research and technology has been asking people since 1979 in three-year intervals. This survey proves what has just been mentioned. In 1997 at least 48% of 19 to 64 year olds attended additional classes of any kind (i.e. 21.1 million people). That is an increase of 6% compared to the rate of 1994 and, moreover, the highest percentage sine the survey was first published in 1979. 30% of those people went to classes for professional further education, while almost the same number (31%) attended evening classes concerned with general or political further education. Especially language classes (18%) have been very popular. As far as professional further education is concerned, mostly courses to adapt to new tasks in a profession were very much in demand ( further education for adaptability, 12%). By contrast, only 2% of the population attended retraining courses and only 3% further training courses for promotion. As for the topics of the classes, the emphasis is on new technologies followed by data processing, management training, mercantile knowledge and sales training, information technology or languages. The kind of qualification people have gained often determines their willingness to go into further education. Highly qualified men and women are especially keen on developing their skills (69% of university graduates attended further training in 1997), while people without finished qualification only rarely attended such a course (24%). The same goes for the kind of employment. The largest group of people attending further training classes are those in high job positions and civil servants followed by self-employed and skilled workers and employees. Workers without special skills are the least to attend further education courses. This comparison shows a massive mismatch on the German labour market. It is the group that should have an interest in being promoted that is less involved in further education. As a consequence, the risk of losing the job is significantly higher for this group. In addition, those people will find it much harder to find a job once they are unemployed. Fortunately, the amount of money spent on further training has increased by and large. While in 1972 only DM 2.1 million were spent by the economy, it were DM 43.2 million 20 years later. Public employers spent DM 10.3 million on the further training of their employees. The government, states and communities spent about DM 4 billion. The fact that DM 46 million were given by private persons shows that measures for further education and training are seen in a very positive light among the population 3. 4.3 Support of vocational training and promotion In Germany, families are supported not only by extra money according to the number of children and by tax reductions, but also by money to enable young people from weaker social backgrounds to do an apprenticeship or to obtain any other qualification up to a university degree. For that reason the government introduced the Bundesausbildungsförderungsgesetz (BAföG). This law for the support of professional qualification has been revised several times since the 80s. The BAföG has got two target groups: students from year 10 onwards (16 year olds) and students from academies or universities. In 1998 about 528.566 students enjoyed receiving this benefit. 3 Source: Bundesministerium für Bildung und Forschung (Hrsg.), Berichtssystem Weiterbildung VII, Bonn 1999 9
About 116.000 received the so-called Student-BAföG in 1998. Of these students 55.000 attended a vocational college and 24.000 a technical college. Further supported students went to evening classes. BAföG is granted to students visiting a university as well. In this case half of the grant is given to them, the other half is an interest-free credit. The payment is limited to a certain length of time. Should this period be exceeded, the students will not get any more money for free and will have to pay interest. In 1998 about 225.000 students received BAföG, of which 144.000 were at universities and 74.000 at advanced technical colleges. A total amount of DM 2.3 billion was spent on vocational trainees according to BAföG (0.76 billion for students on vocational colleges, 1.7 billion to university students). Students of vocational colleges, on average, are supported with DM 423/month, while students from universities receive DM 618/month Since January 1991, BAföG is also granted in the eastern part of Germany, the former GDR. Due to the lower cost of living, the payment is smaller than in the west (DM 423/month or DM 549). The average number of people receiving this grant has been on the decrease: in 1998, about 36% less than in 1993 were supported from the government. Accordingly, the financial burden has been minimized. The support for promotion has got similar aims as BAföG. It is supposed to help junior workers to finish further education and to enable promotion. Therefore, the Aufstiegsfortbildungsförderungsgesetz (AFBG) was introduced on January 1st, 1996. This law guarantees a claim to support for any kind of further education. The final qualification has to be higher than that of a skilled worker or an apprentice. The AFBG covers measures of education for the economic sector, freelancers, agriculture and housekeeping. This further education measure may last up to three years in full-time and up to four years in part-time education. The AFBG consists of a credit from up to DM 20.000 as well as monthly payments and further credits to cover the cost for living. In 1998 about 53.976 people took advantage of this grant, 17% more than in 1997. However, 81% of those supported were men, while only 19% were women. The financial burden was about DM 342 million in 1998, of which DM 295 million were granted as credits and DM 48 million as allowances. As a result, people were, on average, supported with DM 1211/month (39% allowance, 61% credit). 32% of those supported attended one-year courses. Two-year courses were attended by 38%, while 23% finished their further education measures after three years. Most people were between the ages of 20 to 35. Within this group, 40% were 25 to 30 year olds. Only 17% of those receiving AFBG were between 20 and 25. People betwenn30 and 35 covered about 26% of all participants. 5. Recommendations and government initiatives to address the skills problem 5.1 Modernisation of the vocational training system Due to the constant chances in the work sphere, new vocational fields have developed in the last couple of years. These changes, entailing new job skills and requirements, have made an overhaul and modernisation of the vocational training system even more necessary than before. In Germany some professions, which require by law vocational training are already 30 or 50 years old and thus long outdated. From the formerly 364 officially recognized professions requiring vocational training only 250 have been reformed since 1969. In the middle of the 90's old training programs were modernized and/or new one s were created under the joint responsibilities of the Federal Minister for Economic Affairs and the Federal Secretary of Education of the Kohl government. Likewise in 1995 it was unanimously decided by the government and its partners in the business community and in the 10
civil society that the procedures concerning the re-organization of these professions had to be accelerated. At the same time in connection with the structural changes already mentioned above the top business associations of the German economy created an action program called Neue Berufe (New Professions / Trades). This project was created with the goal to bring about new vocational training opportunities and officially certified professions / trade, which take into account the new developments: new trade in existing professional sectors and the development of absolute new professional sectors altogether. In the meantime more than 30 new trades have become officially certified (e.g. Mediengestalter person working for and with digital and printed media, car salesman / saleswoman, salesman/saleswoman for audiovisual products or salesman / saleswoman working for travel agencies). Another important professional sector, which is presently undergoing reconstruction, is the healthcare sector. The action program New Profession also led to the restructuring of existing professional training courses, meeting in this manner the new requirements of the job market and taking into account individual flexibility and flexibility demanded by companies. One recent and important example of the changes created by the action program is the creation of trades requiring an apprenticeship involving the IT sector in 1997. Until then the whole IT sector, which has a great future in front of it, was covered by only one trade requiring an apprenticeship. This outdated trade has been modernised and transformed in four distinct trades requiring an apprenticeship, covering in this way much better the different areas of this vast sector (development, application, consultation and development). Thus, new trades like IT-System-Elektroniker/-in, Fachinformatiker/-in, IT-Systemkaufmann/-frau und Informationskaufmann/-frau were born. 5.2 Instruments of and measurements by the government Some explanations have to be made in regards of the probable causes of unemployment to be then able to better understand the measures taken against unemployment and the present shortcomings of the labour market: unemployment can either be the result of structural problems or be the result of changes in market conditions. Depending on what you think which of the two is the principal cause of unemployment, your measures to alleviate it will differ. Thus, the government, the opposition and trade unions violently discuss on an ongoing basis what measures have to be taken. The debates involve different viewpoints on pay policy, demand or supply oriented labour policy or on measures concerning the stimulation of the economy, monetary and credit policy. Traditional methods for stimulating the labour market and reducing unemployment are for example investment incentives, shorter working hours, job sharing, better job counselling and better help in finding a job (particularly when thinking of the labour market scandal in Germany at the onset of the year 2002: more on this later), continuous education and re-training, longer mandatory schooling as well as a more intensive fight against work done on the side without taxes being declared. A clear conflict also exists between trade unions and employers: While the former plead for public investment and job creation programs involving billions of Euro, the latter are in favour of measures such as investment incentives through the reduction of taxes, growth oriented wage policy or the development of qualification programs for the workforce. 5.2.1 The Bündnis für Arbeit ( Coalition for Work ) In 1995 an initiative designed by the CDU/CSU/FDP government and called Vorrang für mehr Beschäftigung (Priority to the creation of jobs) puts the creation of jobs at the centre of governmental labour policies. The reason for this program was a deficit of more than 5 million competitive jobs and a general degradation of the situation on the job market (despite recoveries relating to market conditions). According to the government the reasons for this negative development were multiple: too high taxes, a high governmental GNP ratio, the increasing indebtedness of the federal and state governments, the high level of additional labour costs, increased regulations and a negative climate for innovation. The Kohl government therefore promoted fundamental changes in labour policies and in the attitudes of economic and political leaders. Hence, the program of the government aimed to combine and balance reasonably the wage, finance, tax and social policies. The following bullet points give us an overview of the concrete measures, 11
which were thought to improve conditions for production, investment and the creation of jobs in Germany 4 : Fostering an entrepreneurial spirit / promoting self-employment More jobs thanks to better, forward looking finance and taxation policies Limits on additional labour costs Accelerated structural changes and creation of jobs with a future More competition = more jobs Improving / developing professional chances Strengthening / improving of vocational training Acceleration of the university reform Reinforcing construction and environmental investments Modernisation of the public administration Infrastructure improvements In the middle of the 90s another step was taken to fight unemployment. Klaus Zwickel, president of the IG Metall, Germany s steel trade union, initiated the Bündnis für Arbeit (Coalition for Work). The principal purpose of this alliance was to make Germany a cheaper location for investments and thus actively oppose the transfer of capital to other countries. In addition, the alliance hoped to attract new foreign investors to Germany. In the beginning of the 90s German investments abroad had risen while foreign companies were transferring their capital to places outside of Germany: this development had the devastating result of rising unemployment in Germany. The Coalition for Work was expected to create new jobs, to limit the siphoning of capital as well as the relocation of industrial production sites. Yet, in the end the coalition, established during the reign of the conservative-liberal government, failed and broke up nationally because of disagreements among the partners of the coalition. On the regional level and in some companies on the other hand agreements between partners reached tangible successes and established enduring coalitions. Here are two examples: Collective bargaining at the Deutsche Bahn AG in 1996 brought about the following results: making 4500 jobs safe in reducing overtime; keeping 6000 workers in having them take charge of restructuring tasks; creation of 500 new jobs through part time employment; training beyond the actual need of the company (training of 4200 apprentices instead of the 2200 needed); larger flexibility in the management of the human resources. The power and energy supplier Berliner Kraft- und Licht-AG (Bewag) formed a company-level coalition with two unions, the ÖTV (a union representing public servant and transportation employees) and the DAG (also representing employees). The coalition s goal was it to hire the company s apprentices at the end of their vocational training. Due to the willingness of the employees to renounce wage and salary increases of 0,44%, Bewag was able to lift its hiring band and to offer more jobs to apprentices during a two-year period. After the electoral loss of the Kohl government, the new social-democratic-green government has made another attempt to forge a national coalition for work, initiating the Bündniss für Arbeit, Ausbildung und Wettbewerbsfähigkeit (Coalition for Work, Training and Competitiveness). The principle goals of the coalition are to reduce the high level of unemployment and to strengthen lastingly the country s economy, especially its international competitiveness. The coalition s final success, that is positive developments in the areas of employment and vocational training, however depends on the level of commitment on the part of the different coalition partners: the government, the employers and the unions. Hence, all important leaders and figureheads of the German economy were invited to take part in the negotiations. Participants in the discussions were the ministers of the federal government in charge of economics, finance, labour and social issues, education and research as well as health, the presidents of Germany s top business associations (Bundesvereinigung der Deutschen Arbeitgeberverbände (BDA), Bundesverband der Deutschen Industrie (BDI), Zentralverband des Deutschen Handwerks und Deutscher Industrie- und Handelstag (DIHT) and the chairmen of the trade unions industry (BDI), central association of the German handicraft and German industry and commercial day (Council of German Chambers of Commerz) as well as the chairmen of the trade unions (Deutscher 4 Source: Bundesministerium für Bildung und Forschung (Hrsg.), Berichtssystem Weiterbildung VII, Bonn 1999 12
Gewerkschaftsbund (DGB), Deutsche Angestelltengewerkschaft (DAG), IG Metall, IG Bergbau, Chemie, Energie und Gewerkschaft Öffentliche Dienste, Transport und Verkehr (ÖTV). These participants formed together the Steering Committee which met on a regular two-week schedule and carried out its discussions in a number of workshops. The working groups or workshops dealt with a wide array of issues, such as the lack of apprenticeships and youth unemployment, education, continuous education and qualification of workers, working hours, benchmarking, the low income sector and how to reform the welfare system. The result of these discussions was a joint declaration, recommending the following actions to be taken: Steering and adjusting the financial policy of the country towards consolidation and promotion of economic growth and the creation of jobs Lowering the tax burden of the companies and in this manner create a more competitive investment climate, which will also improve Germany s image abroad and make it more attractive for FDI Making sure that enough apprenticeships are available so that every young person who wants and can be trained, will be trained; creation of 10,000 new apprenticeships in keeping with the demographic developments Reducing the lack of IT specialists through a several yearlong campaign with the goal to increase the number of gainfully employed people in this sector by 2005. Developing more measures / opportunities relating to the creation and acceptation of part-time work for employees getting close to retirement age: For being able to receive government grants, employers have to hire somebody new in the same position and not leave vacant or eliminate the job all together. Reforming the retirement and pension system in securing simultaneously an appropriate living standard; the employees share in financing the pension system shall be increased Continuing to support actively the economic recovery of East Germany in promoting East German products and services. Redirecting financial resources to groups of concern, to entrepreneurs and to programs and ideas helping the unemployed and social benefit recipients to get back to work. Benchmarking; comparing Germany with other countries and finding thus the most adequate way to combat unemployment in the Federal Republic. Combating youth and long-term unemployment through the improvement of continuous education and vocational training. Facilitating the access to risk capital for SMEs Developing more opportunities for employees to accumulate assets and to participate in profitsharing programs The Bündnis für Arbeit has set into motion a dialogue which encompasses all societal groups in Germany and has found some new ways to form a consensus on employment policy. To this day the Coalition for Work has contributed significantly to the reduction of unemployment. Since the new government took office, one million new jobs have been created. Since 2000 the number of gainfully employed people has risen by 625 000 especially thanks to a wage policy focusing on the creation of jobs. Other discussions among the leaders of the German economy let also to some enduring results 5 : Agreement on a campaign to increase the qualification of the workforce On 1. January 2002 entered into force a new law called the Job-AQTIV-Gesetz which has given new impulses to the modernisation of labour market instruments. General consensus on how to improve certain aspects of the vocational training system to assure that every young person who wants and is able to start an apprenticeship will have the chance to do it. This goal should be reached through measures taken by conferences bringing together the regional branches of the German Employment Office (in the years 2000 and 2001 there were for the first time since 1995 more apprenticeships available than young people still looking for an apprenticeship). The 1999 government initiated program JUMP ( Jugend mit Perspektive ) has been a success; 377 000 young people either found a job or started an apprenticeship The campaign to foster jobs in the IT sector succeeded creating 60 000 new apprenticeships. 5 Source: www.bundesregierung.de/doku Arbeit/Ergebnisse/ix7297_67468.htm 13
5.2.2 Reform of job creation incentive laws With the reform of the job creation incentive laws in 1997, which were replacing and modernising the old law, companies profited from a new legal framework and thus from new opportunities to create more jobs. In detail, the new laws provided for 6 : Training courses with integrated hands on experiences for the unemployed to improve their job qualifications and thus to increase their chances to return to work The possibility for a company to conclude a contract with a local employment office when hiring a long-term unemployed person and to receive then money from the government for a period of 2 weeks to 6 months Subsidies for young companies hiring new personnel; for the hiring of an unemployed person these companies can receive subsidies of 50% of the salary for the period of 12 months Professional rehabilitation of the handicapped Creation of government organised job programs as a measure to improve the qualifications of the unemployed workforce as well as internships in companies with the aim to ameliorate the chances of the unemployed, especially those who are unemployed for a long time, to find a job. Limitation of the scope and time of unemployment benefit entitlements; entitlements also depending, from now on, on age group one belongs to. Inclusion of all lay-off compensations received by a company when calculating unemployment entitlements (calculations are made up to 50% of the unemployment entitlements) 5.2.3 Low income employment the 630-DM-Jobs Probably the most well known approach to reduce unemployment in Germany has been the legal changes regarding the low-income sector. According to the new laws, people working a so-called 630- DM-Job are not burdened anymore with any kind of taxes or contributions to the social security system (630 DM are approx. 322 Euro). Thus, these kinds of jobs (less than 15 working hours per week) became more attractive. They do not require the employee to pay taxes or make contributions to the social security system. The present statistics do not give a clear picture on how many people work a 630 DM job, but it is assumed that approximately 4 million people are at the moment making use of this employment possibility. Debates on raising the limit to 400 Euro or even 800 Euro are carried out with much controversy. Since 1999 employees working only one 630 DM job and who are not working any other job are freed from paying income taxes or making contributions to the social security system. The employers on the other hand are obliged to pay 10 % of the amount of the employee s income to the national pension fund and 12 % to the national healthcare insurance. However, every person working more than one 630 DM job and who is earning more than the limit is obliged make his or her contributions. The contributions to the social security are then carried half by the employee and half by the employer. The same principle applies to someone who works such a low-income job additionally to his main job, which already requires contributions to the social security system. Typically low-income jobs are jobs as nanny, newspaper carrier, as cleaner in private households or for businesses, summer jobs or involve simple clerical work. As a result of and in connection with the growing low income sector, many people demand the extension of combination wages, which so far has only taken place occasionally: In this case, the contributions to the national pension fund and the national healthcare system required to be made by people earning more than the limit but still being part of the low income sector are taken over by the government, thus making low income jobs more attractive to the population at large. With social security contributions of approximately 40 % of the income and additional income taxes, it can happen that in the end a person earning more than 630 DM ends up with much less money in the pockets than a person only working a 630 DM-Job. Hence, accepting to work a fully insured lowincome job seems to many people much less attractive than a 630-DM-job. In fact, while there are approximately 4 million people working a 630 DM-Job, there are not even 100 000 people working a job with a gross income from 630 to 1200 DM. In such cases people are frequently financially better 6 Source: Bundesministerium für Bildung und Forschung (Hrsg.), Berichtssystem Weiterbildung VII, Bonn 1999 14
off to receive unemployment benefits or social welfare assistance. The extension of combination wages could partly remedy this bizarre situation in the future 7. 5.2.4 Other measures Another measure, which has provoked a lot of criticism, is the salary subsidisation of workers with few or no qualifications. The argument behind this subsidisation is that in this way the wages will increase without any costs to the employers and thus making such jobs, perceived as badly paid, more attractive to the unemployed. However, this measure is generally regarded as insufficient, especially when it comes to solve the problem of long-term unemployment. People who are without a job for a long period of time and who have a hard time to get a job because of their lack of qualifications are unlikely to get hired despite subsidies as long as their are other people out there with more skills and better qualifications. Wage subsidies have also proved to be everything else than promising in the case of single parents who are unemployed. In this case, the focus has to be on the improvement of public childcare. As alternative it has been suggested to regulate the demand for simple service jobs. It is for example incomprehensible why you need to have a pedagogic training to be allowed to hand out meals to the elderly or to children. In addition, more part time and temporary jobs should be created. It has also been recently discussed to eliminate Germany s mandatory military / civilian service (the latter being carried out by young men refusing military service out of personal convictions) and to replace the 120,000 young men working in nursing homes and hospitals with trained personnel. The abolition of Germany s military / civilian service and the creation of a professional army could create many new jobs in the health care / personal care sector, jobs which could then be partly financed with the money formerly used to finance the civilian service system. A great number of nursing homes, however, are afraid that such a change would mean the collapse of the nursing and personal care system 8. A new law which just recently entered into force on January 1st, 2002, and which aims to actively combat unemployment is the Job-AQTIV-Gesetz. In the past German unemployment offices had to wait six months before taking measures to actively help people with poor chances to find a job (e.g. older people; six out of ten companies do not want to hire people who are over 50 years old). Thanks to the new law, unemployment offices can become active right away and send at once people with poor chances to find a job to continuous education classes. Thus, on the one hand it becomes more difficult for lazy people who just want to profit from the German welfare system to receive money without doing anything in exchange, and on the other hand people who are unemployed but highly motivated receive a chance to improve their job skills and to become more attractive to potential employers 9. This kind of report cannot keep unmentioned the labour market scandal which rocked Germany at the beginning of this year. The publication that the statistics of the Federal Unemployment Office have been falsified over a long period of time have created a huge uproar. In examining the statistics of the Federal Unemployment Office, Germany s General Accountancy Office found out that up to 70% of all claims of finding a job for an unemployed person have been wrong or invalid. The success quotient of the Federal Unemployment Office is therefore not 51% (This would mean that the Federal Unemployment Office would have succeeded in finding jobs for 3 819 000 people.) as pretended by this institution but closer to 18%. Reasons why these statistics have turned out to be false are probably to be found in the fact that the methods of the Federal Unemployment Office are pretty inefficient and the employees feel overworked. In average the 9000 employees of the Federal Unemployment Office have to handle each a caseload of 900 unemployed people and also have occasionally to help those people who actually do not need the help of the unemployment office. A reform of the Federal Unemployment Office to become effective July 1st intends to increase the number of job mediators to 24 000. In addition, in the future the unemployed will be allowed to turn to private job agencies after only three months of being unemployed instead of six. It is hoped that the new and intensified competition with private agencies will motivate the employees of the official 7 Sources: Herz, W. (2001), Kaputttesten, in: Die ZEIT, Nr. 51, 21; Heuser, U.J. (2002), Der Versprecher, in: Die ZEIT, Nr. 8, 17. 8 Sources: Drieschner, F. (2002), Arbeit schaffen ohne Waffen, in: Die ZEIT, Nr. 16, 7.; Wagner, G.G. (2001), Bestenfalls ein Strohfeuer, in: Die ZEIT, Nr. 50, 36. 9 Source: Wagner, G.G. (2001), Bestenfalls ein Strohfeuer, in: Die ZEIT, Nr. 50, 36. 15