On 1 February 2011, the Federal Employment Agency released figures showing that in January there were 270,000 fewer people registered as unemployed compared with figures for the January 2010. Employers have welcomed these figures, but unions have criticised the creation of insecure jobs, such as fixed-term positions or temporary agency work. However, another survey shows many firms are introducing measures that foster flexible and stable employment relations.
Background
On 1 February 2011, the Federal Employment Agency (BA) reported that unemployment had risen by 0.7 percentage points to 7.9% in January 2011. However, when compared to the unemployment figures of the previous year, 270,000 fewer people were registered as unemployed. BA attributes the lower unemployment rate to the economic upswing and a decreasing labour supply. However, the social partners disagree with each other about the latest developments.
Position of the social partners
On 1 February 2011, the Confederation of German Trade Unions (DGB) published a press release (in German) saying the latest employment figures had been caused by the creation of insecure jobs. DGB says temporary agency work is replacing permanent employment liable to social security contributions. Annelie Buntenbach, Vice-Chair of DGB, told the press that the economic upswing was still fragile and the demand for labour had not yet reached the level of 2007. Though temporary agency work was booming, regular jobs were becoming a thing of the past. Ms Buntenbach therefore called on the German government to create more secure jobs. Moreover, she said, temporary agency workers should be treated like, and receive the same pay as, regular workers.
On the same day, Dieter Hundt, Chair of the German Confederation of Employers’ Associations (BDA), said in a press release (in German) that he welcomed the latest labour market figures and said there were good prospects of lowering the unemployment rate even further. However, to do this, barriers to the labour market would have to be abandoned. Temporary agency work had helped hundreds of thousands of jobless people back into employment. About two thirds of the newly employed temporary agency workers had had no previous employment and he said a law or directive on equal pay for these workers would only destroy temporary agency work.
While the social partners continue to debate the implications of temporary agency work in Germany, a company survey on the balance between flexibility and stability shows that many companies are already developing ways to encourage their employees’ loyalty while at the same time retaining the ability to deal with technological, structural or cyclical changes.
Study results
In January 2011, the Cologne Institute for Economic Research (IW Köln) published a survey (in German, 212Kb PDF) of more than 1,800 personnel managers in three main sectors of the German economy: manufacturing and construction, business-related services, and social and personal services. The results of the survey, conducted in July and August 2010, show that barely 13% of the companies opted to cut the numbers of their permanent staff as a way of coping, for example, with a cyclical economy. Similarly, only 17.7% of the firms dismissed temporary agency workers. Most of the companies (67.1%) had measures in place to deal with an economic downturn such as working time accounts or allowing staff to take time off in return for working longer hours.
However, while such measures can help companies to stabilise employment relations during economic downturns, they are not sufficient to safeguard establishments’ competitiveness should skilled labour become scarce (DE1009019I, DE0707039I). Therefore, most companies cultivate a management style that encourages staff loyalty. Specifically, 66.2% of the companies polled had implemented family-oriented and equal opportunity policies to heighten their attractiveness. Another 61.3% gave employees the scope to develop their own innovative ideas, whilst 54.1% pay wages according to their employees’ achievements. Half of the firms also offer their staff opportunities for skills development, such as e-learning courses, and the provision of specialist literature.
The study holds that a management style which supports the development of the employees’ skills and potential can also help improve the staff’s commitment to the firm; thereby creating more stable employment relationships. Such a management style can also create greater flexibility in terms of human resources allocation, if employees are encouraged to deal with changes. In this context, the analysis shows German companies score highly on:
- trust in the employees’ sense of responsibility (89.9%);
- encouragement of workers to act like entrepreneurs (84.9%);
- annual appraisals between the manager and the individual worker (64.5%);
- commitment by managers to promoting job satisfaction and motivation (62.7%).
One final salient point indicated by the survey is that innovative and highly successful companies are significantly more likely to pursue a human resources approach combining flexibility and stability.
Sandra Vogel, Cologne Institute for Economic Research (IW Köln)