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Friday, May 04, 2012

"The High Cost of Germany's Economic Success"

This sounds familiar:

The High Cost of Germany's Economic Success, Spiegel: ..."Prosperity for all" was once the credo of Ludwig Erhard, the first economics minister of postwar Germany. This promise shaped the country for decades and set it apart from many other economies. But how much is this promise still worth today?
The working world is disintegrating. On the one side are managers, specialists and members of the core workforce, who benefit from the fact that well-trained workers are scarce. On the other side is the reserve pool of workers who can be used as needed and then let go -- as contract workers or through special-order contracts, part-time work or temporary jobs. Many of these people work outside the provisions of collective bargaining agreements.
Labor-market experts view this increasing flexibility as the price of success, a necessary evil that made the rise of the German economy -- from "the sick man of Europe" to the Continent's economic paragon -- possible in the first place.
In fact, the German economy is in better shape than ever. Companies are reporting record profits... In March, the country had an unemployment rate of just 7.2 percent.
Some companies are allowing their employees to benefit from the economic upswing through profit-sharing models. ... Still, such ideal conditions are rare. ... The majority of workers feel very little of what the Economist has dubbed "Germany's economic miracle." For decades, they have had to settle for falling or stagnating real wages, and wages and salaries have been declining for many years as a share of aggregate national income. "In no other European country has social inequality grown as strongly as in Germany," says Gerhard Bosche, the specialist in industrial sociology who heads the Institute for Work, Skills and Training (IAQ) at the University of Duisburg-Essen. ...
This is a fundamental shift for a social market economy whose policies have long been aimed at ensuring that the country's prosperity is fairly distributed to all echelons of society. That system now appears to be eroding fast.
These days,... the old questions of wealth distribution are being asked once again. How can we overcome the gap between rich and poor? How can all employees share in the growing prosperity? And, most of all, what roles should politicians and the parties to collective bargaining agreements play in the process? ...

    Posted by on Friday, May 4, 2012 at 10:27 AM in Economics | Permalink  Comments (121)


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