OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Labour Market Reform in Germany
How to Improve Effectiveness
High levels of unemployment and rising social charges have lead to considerable pressure on labour markets to adjust. Major steps in labour market reform have been implemented over the last three years. These need to be followed up in several respects in order to raise the economy’s capacity to generate employment. The present tax and transfer system still implies significant disincentives for labour supply of older people and spouses, which should be eliminated. Unemployment related benefits and active labour market policies can be better geared toward activating the unemployed, while institutional reform of the Public Employment Service should continue. On the labour demand side, there remains scope to raise the efficiency of Germany's employment protection system. Also, provisions should be made to allow for a higher degree of wage flexibility across qualifications and regions to fight unemployment. Regulatory conditions in other parts of the economy interact in important ways with labour market performance, underlining the need for a broad based reform approach. This Working Paper relates to the 2006 OECD Economic Survey of Germany (www.oecd.org/eco/surveys/Germany).
Keywords: unemployment, minimum wage, labour market reform, wage determination, public employment services, Germany, activation strategies, wage rigidities, labour force participation, employment, employment protection legislation, unemployment benefits, policy synergies
JEL:
J31: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Wage Level and Structure; Wage Differentials;
J65: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Unemployment Insurance; Severance Pay; Plant Closings;
J32: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions;
J26: Labor and Demographic Economics / Demand and Supply of Labor / Retirement; Retirement Policies;
J22: Labor and Demographic Economics / Demand and Supply of Labor / Time Allocation and Labor Supply;
J52: Labor and Demographic Economics / Labor-Management Relations, Trade Unions, and Collective Bargaining / Dispute Resolution: Strikes, Arbitration, and Mediation; Collective Bargaining;
J48: Labor and Demographic Economics / Particular Labor Markets / Particular Labor Markets: Public Policy;
J33: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Compensation Packages; Payment Methods;
J23: Labor and Demographic Economics / Demand and Supply of Labor / Labor Demand;
J68: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Mobility, Unemployment, and Vacancies: Public Policy
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