Germany’s labour market develops a second tier
Martina Metsch is a 34-year-old Berlin-based architect whose career illustrates one of the biggest dilemmas facing Germany today, as the forces of globalisation reshape its highly regulated job market.
Ten years ago, anyone with Ms Metsch’s qualifications would have had little trouble landing a full-time employment contract. Yet since graduating in 2001 she has changed jobs nine times, alternating between internships, fixed-term contracts and self-employment. Stable, secure work, she says, “is a distant dream”.
She is one of a rapidly growing number of Germans who have become exceptions to the rule in a country famous for its tough labour laws and support for the rights of workers. More and more of her fellow citizens are finding the search for full-time, permanent employment a fruitless quest. Those dubbed “atypical workers” in the jargon of economists are fast becoming the norm.
There is still plenty of evidence to support the view that Germany’s problems stem from its rigid labour market. A recent World Bank survey, for example, ranked the country 129th out of 175 on the ease of employing workers. But beside the market for full-time, permanent jobs, a new one characterised by flexibility and low costs has emerged and is fast upstaging the former.
The changes have been brought about by global competition, new legislation and the pressure of high unemployment: “Germany is definitely a two-tier labour market now,” says Kai Deininger at the German arm of Monster, the online job exchange. “This is particularly true for first-time jobseekers, regardless of their qualifications.”
For German companies this is good news. The steady rise in employment registered since the beginning of the year shows that the labour market’s increased flexibility is having a positive effect. Over the short term, it means the robust recovery currently under way should generate more jobs than previous economic rebounds.
Yet this change also threatens to reshape the German welfare state and undermine social cohesion. And for workers, the benefits are ambiguous: more jobs, but worse jobs.
One way to describe Germany’s changing labour market would be as a railway train with two classes (and 36.5m people) on board. The first-class carriages represent the traditional labour market. Those with a premium ticket enjoy full-time employment, extensive legal protection against dismissal and relatively high pay. While they contribute fully to the social security system, they are entitled to generous health and pension benefits.
For decades, this was the world the majority of German workers inhabited. Sector-wide wage agreements struck at regular intervals between business federations and trade unions often provided better working conditions than those guaranteed by law.
In recent years, however, the structure of the job market has changed radically. The “first-class” cabins on the train have become more exclusive while an ever larger number of second-class carriages have been added to the train. In these Spartan coaches, one is easily hired and easily fired; pay tends to be low
