Strategic policy to fight Germany’s unemployment problem

Abstract

Unemployment in Germany remains a major policy issue. The unemployment problem began with ratchet effects following the two crude oil‐price shocks in the 1970s. In each case, a persistent increase in (long‐term) unemployment became particularly noticeable, with the slow rate of job creation in the service sector being a fundamental cause. With the objective of isolating a likely successful policy prescription for Germany, this paper presents an international comparison of different approaches to reducing unemployment and increasing job creation. The author suggests “strategic employment policy” as a possible solution to overcoming the existing blockage of economically reasonable labour market reforms and develops a specific proposal to transform the existing German Alliance for Jobs as a voluntary vehicle for consensus into an incentive‐generating “social pact with bite”.

Citation

Funk, L. (2001), "Strategic policy to fight Germany’s unemployment problem", International Journal of Manpower, Vol. 22 No. 6, pp. 508-525. https://doi.org/10.1108/EUM0000000005900