2008 OECD Economic Surveys: Germany 2008

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This 2008 edition of OECD's periodic survey of the German economy finds Germany enjoying a vigorous recovery after a long period of stagnation. To keep the recovery going, OECD finds Germany facing a number of key challenges including making the tax system more efficient, making labour market improvements last longer, improving education outcomes, strengthening competition in network industries, and making healthcare sustainable. These challenges are all addressed in some detail in this report.

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Maintaining the reform drive to make labour market improvements more lasting

Labour market outcomes are improving rapidly in the current upswing, also reflecting previous reform efforts. To make those improvements more lasting, but also to widen the positive effects, further reform efforts should focus on: i) raising the number of hours worked per person employed; ii) reducing the high share of long-term unemployed; and iii) further increasing employment rates of older workers. These challenges require new reform efforts in some areas, such as reducing barriers to taking up work for second-earners and reforming employment protection legislation for regular work contracts. In other areas it should be ensured that past reforms are not rolled back and that the reform drive is maintained. This relates above all to past increases in work incentives for the long-term unemployed and measures to phase out early retirement options for older workers. Also, potential negative employment effects associated with the introduction of minimum wages should be minimised.

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