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Electronic copy available at: http://ssrn.com/abstract=1736001
TWENTY YEARS AFTER GERMAN UNIFICATION
The Restructuring of the German Welfare and Employment Regime
Anke Hassel
Public Policy, Hertie School of Governance
ABSTRACT
German unification acted as a catalyst for the substantial transformation of
the German welfare and employment regime which has taken place over
the last two decades. The changes can be described as a process of a partial
liberalization of the labor market within the boundaries of a coordinated
industrial relations system and a conservative welfare state. This article
depicts the transformation as a trend towards a more liberal welfare and
employment regime by focusing on the shifting boundaries between status
and income maintenance and poor relief systems.
KEYWORDS
labor market policy; social policy; labor relations; German unification
Introduction
The fall of the Berlin Wall was a catalyst for a major transformation of
the German welfare state and labor market. The adjustment process that
started in the early 1990s was prompted by multi-layered challenges of
unification and the consequent institutional adaptation, the changing role
of Germany in European Monetary Union, the recession prompted by
unification, and the long-term structure problems of the Bismarckian wel-
German Politics and Society, Issue 95 Vol. 28, No. 2 Spring 2010
doi:10.3167/gps.2010.280207
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Electronic copy available at: http://ssrn.com/abstract=1736001
fare state, which had been building up since the early 1970s. In this adjust-
ment process, many facets of the traditional welfare and employment
institutions have remained remarkably stable and probably will remain in
place for a long time to come. If one scratches the surface, however, it
becomes clear that Germany has been, and is, changing more rapidly and
radically than is often perceived. Two areas of change—the regulation of
the labor market and the unemployment benefit system—are used in this
article to illustrate this phenomenon.
This transformation has two defining characteristics. First, traditional
German institutions remain in place, but are nevertheless undergoing
processes of change. Indeed, this combination of continuity and change is
key—it is as if the institutions are being gutted while their walls and ceil-
ings remain in place.1Second, changes in underlying expectations, atti-
tudes and values in business, policy-making, and in the wider society are
fundamental forces driving the country away from its traditional model
towards one that remains essentially German, but that draws on a much
wider range of social, economic, and cultural influences than thirty years
ago. Both features are driven by the challenges of unification. While politi-
cal reassurance and policy continuity were central to managing the transi-
tion of the 1990s, the economic challenges to German business increased
dramatically. Political continuity and economic restructuring could only
work if the institutions were hollowed out and replaced by new meanings.
From the mid 1990s onwards, it was popular to criticize Germany for
its failure to adjust to economic, social, and demographic challenges. The
urgent need for “reform” appeared frequently in newspaper headlines, in
reports by expert commissions and high-flying economists, and even in
newspaper adverts placed by German “citizens’ campaigns.” The basis for
the call to action was Germany’s low—and partially negative—growth rate,
its high level of unemployment and steadily rising public deficit.
The Agenda 2010 reforms from March 2003 and the subsequent adop-
tion of the proposals have exemplified governments’ awareness of the
necessity to react. Whether these reforms present a break with the German
model is still the subject of intensive debate, but certainly changing attitudes
and expectations already have had a marked impact on these institutions.
Globalization, in particular the internationalization of companies and of
business standards, has forced German managers to adopt more open, inter-
national approaches. They have adapted the workings of the traditional cor-
porate governance institutions to their own needs—including the role of
employees in codetermination procedures. Similarly, changing attitudes
towards work and towards the often-conservative role played by centralized
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unions and employers’ bodies have fuelled an approach among the wider
population towards trade unions that is largely instrumental and stripped of
traditional political motivations. Such changes add up to a gradual transfor-
mation of the old German social market model established during the post-
war period, to something that is indeed more liberal than before.
This article is divided in four parts. The first portrays the problems of
the Bismarckian welfare state as the reference point to which the changes
over the last two decades are compared. It discusses the increasing fiscal
constraints on the state generated by increasing long-term unemployment
and heightened levels of inactivity. This coincided with a harsher competi-
tive climate in the 1990s, the introduction of European Monetary Union,
and the deep recession early in that decade. Moreover, the collapse of the
eastern German labor market put further strain on the welfare state. The
second and third sections discuss the changes regarding labor market reg-
ulation and transfer policies respectively. In both areas, however, change
can be observed within a given regulatory framework. The final section
discusses the politics of the adjustment process and provides a prognosis
of what is to come.
The Bismarckian Welfare State and its Challenges
By the end of the 1980s, most observers of German social and employ-
ment policies agreed that the welfare state had run out of steam and had
accumulated numerous structural problems.2These consisted of:
1) A steady decline of the employment rate: from the onset of the
oil crisis in the early 1970s, government responses consisted of incentives
for employees who were made redundant to leave the labor market. Early
retirement schemes—initially designed for problems in the mining and
steel industry—were expanded to other sectors and then to the labor mar-
ket as a whole. Similarly, work creation schemes renewed access for the
long-term unemployed to relatively generous benefits, but did little to
reintegrate the schemes’ participants back into the labor market. As a con-
sequence, Germany achieved one of the lowest employment rates for
elderly males in the OECD.3
2) A steady increase in the rise of payroll taxes: between the late
1960s and the late 1980s, social security contributions rose from 27 to 35
percent of gross wages. As a highly regressive tax on labor, these contribu-
tions increased labor costs of the unskilled resulting in an exceptionally
high unemployment rate for unskilled compared to skilled workers.4
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3) A complex structure of shared responsibilities for the long-
term unemployed: involving local authorities and the labor agency
(Bundesanstalt für Arbeit), rather than trying to bring the unemployed
back into work, the administrative structure gave incentives to shift them
into a new scheme.5
The problems embedded in these policy responses were all well known
under the center-Right government of Helmut Kohl. In fact, the policy-
measures that led to the situation had been carried by an overwhelming
majority in parliament and by all political stakeholders, particularly the
unions and employers. It was a form of corporate restructuring at taxpay-
ers expense which was, however, widely approved by political actors and
the public at large, since it cushioned the negative effects of redundancies
and unemployment.6Nevertheless, a rising number of observers—from
both politics and economics—started to criticize the low activity that the
welfare system has generated.7
Nevertheless, adjustments to the system were minor, rather haphazard,
and largely in the interest of balancing the budgets of various social secu-
rity funds. Benefit entitlements were lengthened and then shortened. Enti-
tlements to pensions and health insurance for the unemployed were
changed at will by the government to balance the budget. Neither the con-
servatives nor the Social Democrats had a strong desire for change.
It was only in regard to the pension system that the government real-
ized the unsustainable nature of the pay-as-you-go system, combined with
an aging population and a continuing trend towards lower retirement
ages. The Kohl government had contemplated a law to adjust pension
entitlements with demographic changes on the eve of the fall of the Berlin
Wall. But, as is well known, German unification put an end to the pension
reform, as well as to other discussions on policy reforms in the area of
social and employment policies.8
During the 1990s, the features and the structural problems of the West
German welfare state were transferred to the new Länder and were exac-
erbate in the process. As unemployment exploded in the East, social pro-
tection was needed. In 1991, unemployment levels in eastern Germany
stood at 10.2 percent and rose to 19.2 percent in 1998. In western Ger-
many, unemployment also rose in the same period from 6.2 percent to
10.2 percent. Within four years after 1989, the number of employees in
the East shrank by 36 percent (- 3.5 million). 7.3 million out of 9.8 million
employees lost their previous jobs, only 25 percent of all employees
remained in their workplaces. Particularly hard hit were farming jobs
(declining by 77 percent) and manufacturing (reduced by 51 percent).9In
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the service and public sectors, less than a third of employees lost their
jobs. While employment in private services increased steadily, the num-
bers were not sufficient to compensate for the job losses elsewhere.
At the same time, the continuation and expansion of the social provi-
sions for the unemployed catalyzed change. Companies reacted to the
recession of the early 1990s and governments confronted fast-rising public
debt. Both responses led to adjustment strategies that ultimately con-
tributed to fundamental change, while institutions and structures remained
largely in place.
Increasing Flexibility in a System of Tight
Employment Protection
In many accounts by the IMF and the OECD, labor market regulation is
seen as a stumbling block limiting the growth potential of the German
economy. According to the OECD, Germany is near the top in a ranking of
employment protection measures, in fourth place behind Italy, France,
and Sweden. Recipes for overcoming economic stagnation usually start
with proposals to deregulate the labor market, including Germany’s labor
relations regime. The most recent survey of Germany by the OECD states:
“The government should thus consider easing employment protection leg-
islation for regular job contracts, which is strict by international standards,
in order to use the current upswing to create as many regular job contracts
as possible.”10
Indeed, despite continuous recommendations by the OECD since the
1994 “Jobs Study,”11 Germany has done very little to change its system of
labor market regulations, including employment protection and the col-
lective bargaining framework. Political proposals to reduce employment
protection and to decentralize collective bargaining were often on the
political agenda. In Gerhard Schröder’s Agenda 2010 speech, for exam-
ple, both items were mentioned as potential reforms if the social partners
were unable to find their own ways of making the labor market more
flexible. The social partners did find their own ways, and, as a result, the
core elements of this model are still in place—centralized, industry-wide
collective bargaining, co-determination, and sectorally-based union and
employers’ bodies operating in a tight legal framework in which dis-
missals are highly regulated.
At the same time, the image of tight regulation enforced by strong trade
unions holding a firm grip on companies is a partially distorted view. In
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fact, the employment landscape in Germany has changed much more sig-
nificantly than is commonly perceived. Companies today are generally
much more able to determine wages and working conditions for their
employees than they were a decade ago.
During the recession of 1992/1993, half a million jobs in the manufac-
turing sector were shed. Redundancies were negotiated with the help of
unions and plant-level representatives. “Concession bargaining” at the
plant level now takes place in the majority of big companies in industry.
Longer working hours, pay cuts, and flexible work organization has
spread throughout the economy. Today, plant-level agreements exist in a
third of private sector companies, producing terms and conditions that
deviate from industry-wide collective agreements. Another 15 percent of
companies simply violate the agreements, according to a survey by the
union-based research institute WSI.12
The price that companies paid for plant-level agreements was, how-
ever, a move towards tighter dismissal protection for the existing work-
force, rather than a more flexible regime of hiring and firing. Firms pledge
in plant-level agreements to refrain from any collective dismissal for a
period of several years. In a recent bargaining agreement, for instance,
Deutsche Bahn, the German railway firm whose goal is to be listed on the
stock exchange, has committed itself to forego any redundancies until the
year 2023.
The flexibility firms gained from concession bargaining is internal
cooperation rather than external adjustments. Unions and employers
adjusted collective agreements to allow for plant-level deals. They have
introduced “opening clauses” that allow for local bargaining, if the busi-
ness situation is bad. In the chemical sector, pay grades were widened by
introducing a “pay corridor” reaching down to 10 percent below agreed
rates, following pressure from tire manufacturer Continental. Therefore,
pay grades have become more differentiated and lower pay grades have
been introduced. Even the trademark of German trade unionism, the
thirty-five-hour week, has been effectively shattered. Studies show that the
majority of white-collar employees in the car industry does not work the
trirty-five-hour week but has returned to a forty-hour one. In a face-saving
exercise, the IG Metall engineering union now negotiates over annual
working time accounts, in which an average of thirty-five hours for blue-
collar workers must be reached over a period of two years. In reality, the
issue for IG Metall is not the length of the working week, but overtime
bonuses. The fight for a shorter working week has long been lost. Accord-
ing to data from the Federal Statistical Office, the share of German
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employees who work forty hours or more has increased steadily since
1993. At the same time, the share of those that work between thirty-five
and forty hours is decreasing.13
Many companies design new work arrangements with their works
councils at the plant level without even informing the associations. More-
over, it is virtually impossible for unions to monitor and police violations
of collective agreements at the plant level. Hardly any employee is pre-
pared to sue a company for breaking an agreement, and unions do not
have the staffing capacity to enforce or negotiate agreements in small- and
medium-sized companies.14
Those firms unhappy with the general state of labor market regulation
left the system—having chosen exit, rather than voice. Firms are generally
less willing than previously to participate in the industry-wide collective
bargaining system. Indeed, the share of firms that belong to employers’
associations and are thereby obliged to apply industry-wide collective
agreements has diminished to 45 percent in western Germany. In eastern
Germany, only 23 percent of companies are members of associations. The
share of private-sector employees that work in companies that are part of
a collective agreement has declined to roughly 60 percent.15
The remaining firms chose to reform the system from within. Changes
in legislation often would not have increased flexibility, since collective
agreements propped up labor laws. For instance, the framework collective
agreements in the metal sector have clauses that forbid dismissals for
elderly workers above the age of fifty-three.16 Looser employment protec-
tion legislation would not have changed this. Rather, firms hoped that
competitive pressure, stubbornly high unemployment, and weaker trade
unions would allow them to change the conduct of these agreements and
give them internal flexibility to reduce labor costs as needed.
With regard to union cooperation, this strategy worked. While unions
rarely block workplace deals aimed at providing job security and com-
petitiveness, they usually do not talk about these deals in order to avoid
other firms following suit. This has led to a further worsening of the
unions’ public image and tended to undermine their own authority. IG
Metall’s failed strike for the thirty-five- hour week in the eastern metal
industry in mid 2003 showed how much the union misjudged the effects
of these deals.
In sum, the labor market that has emerged from these micro-level
processes is less regulated than is commonly assumed. One should recall
that big manufacturing companies in the U.S. and UK also have strong
union representation. The regulatory power of the unions in these coun-
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tries does not, however, extend beyond these plants. It has been a feature
of the German model of labor market regulation that agreements were
forged that set universal rules for the vast majority of employees. This sys-
tem is being eroded by company opt-outs and concessionary bargaining.
Tight labor laws that regulate dismissals and workers’ participation still
exist. Nevertheless, they increasingly divide workers into those who enjoy
such protections and those who do not. Employment expansion has taken
place among workers on temporary contracts, in temping agencies, and
in so-called precarious jobs. More than 30 percent of young workers
between twenty and twenty-four years of age (and who are not on voca-
tional training contracts) are employed on temporary contracts, fore-
stalling employment security and dismissal protection.17 In the first quarter
of 2009, there were 6.7 million workers employed in so-called mini-jobs—
low wage jobs that largely are exempted from social security charges.18
Temping agencies are now widespread, even in the manufacturing sector.
Deregulation is spreading to the fringes of the labor market, and unions
have little power to do anything about it.
Protection for the core of the workforce and instability for fringe work-
ers (the well-documented insider-outsider problem) are complementary to
each other. Firms argued that the only way to protect core workers was to
look for other options to lower labor costs—coming at the expense of other
parts of the workforce. Flexibility was thereby achieved in an uneven or
segmented pattern. Thus, the German case shows that flexibility has
increased, but in a patchy and not-universal way.
Activation: Addressing the Public Funding Crisis by Increasing
Work Incentives
The German welfare state always has been a mixture of an Anglo-Ameri-
can lean benefit system for the needy poor, and a contribution-based
insurance system covering periods of unemployment and old age that
links benefits to previous pay. In the past, however, the focus was firmly
on the latter component, centered on the idea of Lebensstandardsicherung
(securing of living standards) both now and in the future. Once a certain
living standard was reached—say that of a skilled worker—the system guar-
anteed the maintenance of this standard, also during periods of unemploy-
ment and in retirement.19
Until 2005, there was a third category between the means-tested poor
relief benefit and the regular unemployment benefit, which was specifi-
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cally designed for the long-term unemployed. Those still unemployed
after the unemployment benefit entitlement had expired received tax-
financed “unemployment assistance,.” which was lower than unemploy-
ment benefits, but still connected to previous earnings.
The three different benefit systems for the unemployed produced com-
plex administrative procedures. Partly in order to streamline these processes,
the Hartz reforms proposed to merge unemployment assistance and parts
of the coverage of social assistance into one benefit, called Arbeitslosengeld
II (ALG II), essentially for the long-term unemployed. (Social assistance
remains for those unable to work). The philosophy that underlies the
reform previously had been used by the Blair government in Britain for
activating the unemployed. Here, the state provides opportunities, but also
asks for commitment and personal effort to find a new position. It aims to
toughen the rules for entitlement to social assistance and to increase the
incentives to look for work for those on unemployment assistance. Impor-
tantly, these incentives include tougher sanctions for the unemployed—job-
less people face cuts in benefits if they refuse job offers—and increased
pressure to be more geographically mobile in the job search.
Labor economists and sociologists frequently make the point that after a
year of unemployment, the value of previous qualifications is significantly
reduced, and the long-term unemployed only will find new work in areas
that are markedly worse paid than their previous job.20 Therefore, linking
unemployment benefits to previous earnings in the past was seen as creat-
ing a disincentive for people to accept a new job. In contrast to the Nordic
countries where long duration periods of unemployment benefits are also
common, the German system had additional features that prevented the
unemployed from looking for work. In particular, the protection of skills
was a major hallmark of the system. Unemployed individuals with a spe-
cialist trade could not be asked by the job centers to move into a different
profession. Up until the 1990s, job agencies could only offer vacancies that
matched the skills of the unemployed. The high level of skill protection
gradually eroded during the adjustments in the 1990s. Still, when it came
to implementation, many professionally trained unemployed workers
insisted on pursuing their trade or remaining unemployed, even when the
chances of being reemployed were slim.
The 2004 reform of the unemployment system therefore targeted the
incentive structure of benefits and the level of skill protection. In order to
reduce the incentives to remain unemployed rather than taking lower-paid
jobs, the maximum duration of unemployment benefits also has been cut.
Unemployment benefits are still available, but are now limited to the first
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year of unemployment (eighteen months for those over fifty-five).21 A new
benefit (ALG II) was introduced for the long-term unemployed (exceeding
twelve months of unemployment). This is a means-tested flat rate payment
set at what is universally seen as a low level, that of social assistance (it can
be topped up temporarily if a claimant previously received considerably
higher unemployment benefit). Those receiving ALG II usually must prove
that partners and close family members living in the same household are
unable to support them, and that most of the recipient’s savings are used
up. Moreover, ALG II recipients will be required to take any job that is
offered to them to prove their willingness to work.
The reforms shifted the relationship between means-tested flat rate ben-
efits, which are available universally and not tied to entitlements, and con-
tribution-based, status-oriented unemployment benefits clearly towards an
increase of the former. As the data in Table 1 show, before the reform, the
ratio of recipients of earnings-related benefits to flat rate recipients was
well in favor of earnings-related benefits, while after the reform, the flat
rate recipients clearly outnumbered the others.
Table 1: Recipients of Benefits Due to Unemployment (in millions)
Universal benefit,
Earnings related benefits no eligibility test
Unemployment benefit Unemployment Assistance Social Assistance
2004 1.84 2.19 2.91
Earnings related Universal benefit, no eligibility test,
benefit means tested
Unemployment Unemployment Social
Benefit Benefit II Assistance
2005 1.72 4.98 0.27
Source: Bundesagentur für Arbeit, Arbeitsmarkt in Deutschland: Zeitreihen bis 2006 (Nuremberg, 2007);
Statistisches Bundesamt, Sozialleistungen: Statistik der Sozialhilfe, Fachserie 13/ Reihe 2.1. (Wiesbaden,
2004).
At the same time, the benefit system reform has not altered some of the
most important obstacles towards a more employment-friendly system—
the high tax-wedge that burdens low-skilled and low-paid work dispropor-
tionally. Germany remains the OECD country with the highest marginal
tax rate for low-paid employment. While a number of social security
exemptions were introduced for part-time, low-paid employment (the so-
called mini jobs), full-time employment for low- paid workers is taxed at a
rate of 36 percent.22 Combined with strong pressure on the unemployed
to take up low-paid employment and a new system of topping up income
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with partial benefits, the recent reforms have created strong incentives for
low-skilled workers to take up part-time employment for very low wages
and simultaneously draw social security benefits. As a consequence, Ger-
many has now moved to the top of the list within the European Union as
the country with the highest share of working poor.
Unlike the labor market regulation example discussed above, this bene-
fit system reform has been driven largely by politicians, but with economic
and financial factors—in particular high structural unemployment, the
state’s severe budgetary problems, and the financial crisis of local authori-
ties—playing a vital role in forcing political decision makers to act. The
motivation for a comprehensive restructuring of the benefit system was a
mixture of wanting to provide more financial incentives for work, as com-
pared to non-work, and a deep financial crisis of local authorities, which
were increasingly forced to take care of the long-term unemployed.23 As a
result, the distinction between skill-specific and unspecific benefits has
become sharper. Insiders—those with permanent employment—tend to
worry even more about employment security. Firms are therefore even
more under pressure to avoid major lay-offs.
The Process of Adjustment
As these two examples make clear, Germany is moving towards more flexi-
bility and liberal policies, but it is doing so gradually and more-or-less
within the framework of the established institutions of a conservative wel-
fare state and a coordinated market economy. Increased labor market flexi-
bility has been achieved by a two-tier system in which the insiders are
forced to make concessions regarding pay and working time in order to
achieve job security, while the outsiders experience relatively unstable
employment conditions. The move towards a more employment- friendly
benefit system accordingly provides temporary skill-specific benefits for the
insiders, which increases the pressure on firms to provide job security or
facilitate the transition to new employment if the firm has to lay-off workers.
Segmentation is therefore a defining characteristic of the transformed
German model, with the inner core smaller than before and the outer
fringe under stronger pressure to adapt to a flexible labor market.24 As a
result, liberalization is taking place in the context of a German regulatory
framework and German institutions. The driving forces for liberalization
are twofold. First, firms were confronted with the postunification reces-
sion, an increase in labor costs, and a worsening of their competitive posi-
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Twenty Years After German Unification
tion. Second, the government budget quickly became overburdened by
social expenditure. Indeed, social expenditure as part of total government
spending stood at 22 percent in 1990, but increased to 57 percent in
2000.25 Fiscal spending was therefore squeezed by social spending.
For both developments, unification was the key catalyst. While the
financial burden and the negative effects of low activity in the labor mar-
ket were visible before the fall of the Berlin Wall, the simultaneous neces-
sity to keep the main framework of social security and labor market
institutions for political reasons while adjusting to the economic shock of
unification and European monetary integration facilitated the pattern of
adjustment. It is hard to see how this pattern will be broken in the future.
Germany certainly is moving. It is moving towards more flexibility and
more employment-oriented policies—albeit in the framework of traditional
corporatist, conservative, and coordinating institutions. Therefore, the
changes will not necessarily produce similar outcomes as in more liberal
and flexible countries. Rather, political and economic actors in Germany
have dealt with their local problems by adjusting local institutions in their
own way and according to their own interests.
ANKE HASSEL is professor of public policy at the Hertie School of Gover-
nance in Berlin, Germany. She specializes in European Union labor rela-
tions and has written a book about the effects of European Monetary
Union on national labor relations institutions and the emergence of social
pacts. Since then, she has worked on the transformation of the German
political economy since unification, with a particular focus on welfare and
labor market reforms. She is a member of the editorial board of the Euro-
pean Industrial Relations Journal and the public administration journal der
moderne Staat, as well as a member of the executive council of the Society
for the Advancement of Socio-Economics.
Notes
1. See Anke Hassel and Hugh Williamson, “The evolution of the German model: How to
judge reforms in Europe’s largest economy,” Paper prepared for the Anglo-German
Foundation, 2004.
2. The problems of the Bismarckian welfare state are analyzed in an exemplary way by
Phillip Manow and Eric Seils, “The Employment Crisis of the German Welfare State,”
07-Hassel:Layout 1 4/26/10 1:12 PM Page 113
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Anke Hassel
West European Politics 23 (2000): 137-160; Fritz W. Scharpf and Vivian A. Schmidt,
“Adjusting Badly: The German Welfare State, Structural Change, and the Open Econ-
omy,”in Welfare and work in the open economy, volume 2, eds., Frtz Scharpf and Vivian
Schmidt (Oxford, 2000), 264-308; and Werner Eichhorst, Stefan Profit, et al., “Bench-
marking Deutschland: Arbeitsmarkt und Beschäftigung,” Bericht der Arbeitsgruppe
Benchmarking und der Bertelsmann Stiftung an das Bündnis für Arbeit, Ausbildung
und Wettbewerbsfähigkeit (Berlin, 2001).
3. Eichhorst et al. (see note 2).
4. See Wolfgang Streeck and Christine Trampusch, “Economic Reform and the Political
Economy of the German Welfare State,” German Politics 14, no. 2 (2005): 174–195.
5. On the complex system of shifting the costs for the long-term unemployed between dif-
ferent social security systems see Christine Trampusch, “Ein Bündnis für die nachhaltige
Finanzierung der Sozialversicherungssysteme: Interessenvermittlung in der bundes-
deutschen Arbeitsmarkt- und Rentenpolitik,“ Max-Planck-Institut für Gesellschafts-
forschung -Discussion Paper 03, no. 1, (Cologne, 2003); available at http://www.mpifg.de/
pu/mpifg_dp/dp03-1.pdf; and Christine Trampusch, Der erschöpfte Sozialstaat Transforma-
tion eines Politikfeldes, Schriften aus dem Max-Planck-Institut für Gesellschaftsforschung, 66
(Frankfurt/Main, 2009).
6. On the fiscal implications see Wolfgang Streeck, “From State Weakness as Strength to
State Weakness as Weakness: Welfare Corporatism and the Private Use of the Public
Interest,” Max-Planck-Institut für Gesellschaftsforschung Working Paper, (Cologne,
2003).
7. Particularly in the comparative and international debate Germany’s performance was
seen critically. See Manow and Seils (see note 2) and Anton Hemerijck, Philip Manow,
und Kees van Kersbergen, “Welfare without work? Divergent experiences of reform in
Germany and the Netherlands,” in Survival of the European Welfare State, ed., Stein
Kuhnle (London, 2000), 106-127.
8. On the initial policy effects of unification see Gerhard Ritter, Der Preis der deutschen Ein-
heit. Die Wiedervereinigung und die Krise des Sozialstaats (Munich, 2007).
9. Data are based on Klaus Funken, “Keine Wende am Arbeitsmarkt in Ostdeutschland:
Eine Zwischenbilanz im Jahre 1996,” Wirtschaftspolitische Diskurse 89 (1996); available at
http://library.fes.de/fulltext/fo-wirtschaft/00323toc.htm.
10. OECD Policy Brief (2008); available at http://www.oecd.org/dataoecd/24/9/40367952.
pdf.
11. OECD, The OECD Jobs Study, Facts, Analysis, Strategies (Paris, 1994).
12. Reinhard Bispinck and Thorsten Schulten, “Verbetrieblichung der Tarifpolitik?—
Aktuelle Tendenzen und Einschätzungen,” WSI-Mitteilungen (2003): 157-166.
13. Statistisches Bundesamt, “10 Jahre Erwerbsleben in Deutschland,“ (2002).
14. On concession bargaining in the aftermath of unification see Britta Rehder,
“Betriebliche Bündnisse für Arbeit in Deutschland. Mitbestimmung und Flächentarif im
Wandel,” Schriftenreihe des MPI für Gesellschaftsforschung 48 (Frankfurt/ Main,
2003); and Anke Hassel and Britta Rehder, “Institutional Change in the German Wage
Bargaining System—The Role of Big Companies,” Max-Planck-Institut für Gesellschafts-
forschung Working Paper 01, no. 9 (Cologne, 2001).
15. Available at: http://doku.iab.de/kurzgraf/2008/kbfolien16082.pdf.
16. Framework Agreement for the Metal Sector in Baden-Württemberg.
17. Press release by the Statistische Bundesamt, “40% der Erwerbstätigen unter 20 Jahren
haben einen Zeitvertrag,“ (2005); available at http://www.destatis.de/jetspeed/portal/
cms/Sites/destatis/Internet/DE/Presse/pm/ 2005/04/PD05__193__133,templateId=
renderPrint.psml
18. Press release of the Minijob-Zentrale, (2009); available at http://www.minijob-zen-
trale.de/nn_10152/sid_291. A824859FE226BC8F05965705DE450/nsc_true/DE/5__
Presse/09__06__03.html.
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19. The importance of status maintenance in the Bismarckian welfare state led to its classifi-
cation as a conservative welfare state by Gosta Esping-Andersen,. The Three Worlds of
Welfare Capitalism (Princeton , 1990).
20. Markus Gangl, “Welfare states and the scar effects of unemployment: A comparative
analysis of the United States and West Germany,” American Journal of Sociology 109, no. 6
(2004): 1319-1364.
21. See for a detailed discussion of the Hartz IV reforms see Anke Hassel and Christof
Schiller, “Sozialpolitik im Finanzföderalismus. Hartz IV als Antwort auf die Krise der
Kommunalfinanzen,“ forthcoming in: Politische Jahresschrift 1 (2010).
22. Herwig Immervoll, “Minimum Wages, Minimum Labour Costs and the Tax Treatment
of Low-wage Employment,” OECD Social Employment and Migration Working Papers 46
(2007).
23. For a full explication of the argument see Anke Hassel and Christof Schiller, “Bringing
the state back in—the role of fiscal federalism in welfare restructuring,” Paper prepared
for the 21st annual meeting of the Society for the Advancement of Socio-Economics,
Sciences-Po, Paris, 16-18 July 2009.
24. Bruno Palier und Kathleen Thelen, “Dualizing CMEs: Flexibility and change in coordi-
nated market economies,” Paper presented at the Sixteenth International Conference of
the Council for European Studies, Chicago 6-8 March 2008.
25. OECD, Social Expenditure Database; available at http://www.oecd.org/document/9/
0,3343,en_2649_34637_38141385_1_1_1_1,00.html
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