German Government presents its National Action Plan on Employment

In April 1998, the German Government presented its National Action Plan on employment, which contains a broad range of economic, financial, education and labour market policy initiatives aimed at realising the EU Employment Guidelines for 1998.

After the European Council had adopted its Guidelines for Member States' Employment Policies for 1998 in December 1997 (EU9712174N), all Member States were committed to incorporate these guidelines into National Action Plans (NAP s) on employment and to submit these plans for examination by the European Council meeting in Cardiff in June 1998. On 22 April 1998, the German Federal Government presented its National Action Plan for 1998 which contains two parts:

1. a general explanation of the Government's understanding of employment policy; and

2. a list of measures to realise the 1998 EU Employment Guidelines.

In the first part, the Government expresses its view that "the key to higher employment lies in adjusting to structural changes. New employment opportunities are won through competition in the market."

The overall governmental employment policy is essentially following a "supply-side approach" which has the central aim of creating predictable and favourable conditions for new investments on the assumption that these new investments will lead to the creation of new jobs. Therefore, the Government sees its main contribution to fighting unemployment as "an employment-friendly taxation policy, more competition and privatisation, cutting the red tape and simpler and faster planning procedures".

In the second part of the German NAP, the Federal Government presents a broad catalogue of current measures and activities which are listed in relation to the various EU employment guidelines (for a detailed summary see the annex at the end of this feature). Following the four main "pillars" of the EU guidelines, the German Plan focuses on the following topics:

1. improving employability: The widest part of the Plan deals with this first pillar and lists, in particular, various governmental programmes and activities for the promotion of vocational training;

2. developing entrepreneurship. The Action Plan lists various government cost- and tax-saving measures;

3. encouraging adaptability in business and among employees. Here, the Government refers mainly to various recent collective agreements between the social partners for flexible and differentiated working conditions; and

4. strengthening the policies for equal opportunities. Here, the Government refers mainly to its legal provisions aimed at improving the employment opportunities of women and seriously disabled people.

The involvement of the social partners

The European Council's Resolution on the 1998 Employment Guidelines pointed out that the social partners are expected to make an important contribution and should become involved in the implementation of the guidelines in NAPs. Therefore, in March and April 1998 the German Federal Government organised several rounds of joint talks with representatives from the trade unions and the employers' and business associations on the implementation of the Employment Guidelines. These talks took place at three levels:

1. at the level of the Federal Ministry of Economics, chaired by Minister Günter Rexrodt, to discuss general economic policy;

2. at the level of Federal Ministry of Labour and Social Affairs, chaired by Minister Norbert Blüm, to discuss social and labour market policy; and

3. at the level of the Federal Ministry of Education, Science, Research and Technology, chaired by Minister Jürgen Rüttgers, to discuss vocational training policy.

However, none of the rounds of discussions were able to develop a joint statement or recommendation on how to implement the EU guidelines into a National Action Plan. Although there was some consensus on certain measures for the promotion of vocational training and better support for long-term unemployed people, in most political fields the social partners had unbridgeably different positions on how to fight unemployment. There were thus no systematic contributions by the social partners to the German NAP.

After the Government had announced its final plan, the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) called it "all in all disappointing". According to the DGB, the proposed measures are neither sufficient nor suitable to make real progress in reducing the number of unemployed people. On the contrary, the DGB interprets some points of the NAP rather as a "provocation" - for example, when the Government sees the cutting of continued payment of wages in the case of sickness or the weakening of dismissal legislation as employment-promoting measures. In general, the DGB has criticised the Government's employment policy as unequally following a supply-side approach. Instead the unions want a more active employment programme which should also include more public funding for employment-creating measures.

On the other hand, the Confederation of German Employers' Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA) has always expressed its strong scepticism about the usefulness of state-sponsored employment-creating programmes, either at national or at European level. According to the employers' association, labour market policy could at best help to improve the employability of certain groups of employees, but is unable in itself to create new jobs. Therefore, in the employers' view, the best employment policy is one which improves the framework conditions for profitable investments and decreases the tax and labour cost burdens of companies. The BDA therefore supports the main parts of the German NAP while at the same time announcing its concern that the idea of a state-sponsored employment policy could gain more influence in Europe.

Commentary

It is an open secret that among the EU Member States the current German Government has probably one of the most sceptical position regarding the question whether or not the EU should gain more competence in the field of employment policy. In referring to the "principle of subsidiarity" the German Government declares explicitly that employment policy at European level should "ensure that national responsibility is preserved" and that all employment measures have "to take account of the existing financial constraints and hence the need for budgetary discipline" (German NAP, p.3). Against this background, the German Plan is more or less a comprehensive list of current economic, financial and labour market activities of the German Government which basically follows the philosophy of supply-side economics, including a strong financial restriction on active employment policy.

While German employers basically support the Government's view, the trade unions, with the support of all major political opposition parties, strongly criticise the Government for blocking a more sophisticated employment policy at European level. Considering the rather different positions on employment policy held by employers' associations and trade unions in Germany, there is no surprise that the social partners were not able to agree on a joint initiative regarding the German Plan. Furthermore, in the light of the forthcoming general election in September 1998, the political debates among the social partners have become even more polarised, which currently makes joint initiatives very unlikely (DE9803254F). Joint talks over a new "pact for jobs" (Bündnis für Arbeit) which, in the meantime, has been proposed by representatives of all major political parties and social partner organisations, will at the earliest start in the end of 1998 under the aegis of a newly-elected government. (Thorsten Schulten, Institute for Economics and Social Science (WSI))

Annex: Selected measures from the German National Action Plan for employment, 1998

First pillar - improving employability

• Total spending of DEM 2.81 billion (1997: DEM 2.55 billion) for active labour market measures to combat youth unemployment.

• A "national action plan for vocational training", involving the following: - the German Chamber of Commerce and Industry (Deutscher Industrie- und Handelstag, DIHT) and the Central Association of German Craft Industry and Trades (Zentralverband des deutschen Handwerks, ZDH) are aiming for about 25,00 extra training places for 1998; - extra programmes to promote training in eastern Germany; - financial support for investment in supra-company vocational training institutions; - the funding for the Federal Government's ERP training places programme will be doubled in 1998, allowing support for the creation of 6,700 new places; - increased use of training advisers and training place development and procurement officers; - a "joint training programme" to promote training in small companies which cannot provide training on their own; and - a special programme to promote training in foreign firms.

• A "youth work for the world of work" programme to improve the occupational and social integration of disadvantaged young people.

• A full range of labour-market policy instruments to prevent and combat long-term unemployment including: - the use of the European Social Fund for training long-term unemployed people in the Federal States (Länder); - the use of the instruments provided by the Employment Promotion Reform Act 1997 (Arbeitsförderungs-Reform-Gesetz); - a policy of intensive guidance and placement for long-term unemployed people through the employment offices and other "suitable third parties" , such as private employment agencies; - a new occupational integration contract (Einglieiderungsvertrag) which gives an employer the opportunity to "try out" a former long-term unemployed person. The employment exchange reimburses the employer for payment due to the employee in the event of lay-offs; - an extension of the federal programme for integration of long term unemployed people beyond 1998 to 2001; and - a more effective cooperation between employment exchanges and social work departments.

• In 1998, the Federal Government and Federal Employment Office alone have DEM 40.8 billion available for active labour market measures and, therefore, expect that more than 20% of unemployed people will benefit from these measures to improve their employability.

• In 1998, the employers and unions will launch various new initiatives for the creation of additional training opportunities and support federal Government initiatives.

• The development of apprenticeship training systems, eg by modernising existing job profiles and creating new occupations.

Second pillar - developing entrepreneurship

• Reducing overhead costs for businesses through: reforms of social security to decrease companies' contributions; reduction of continued pay in the event of sickness from 100% to 80%; weaker dismissal protection; and more use of limited-duration employment contracts.

• More incentives to start up new businesses, for example improving access to risk capital.

• Creating jobs in the "social economy" through: introduction of the long-term care insurance scheme (Pflegeversicherung) which has generated new jobs in the care sector; and better legal conditions for jobs in private households.

• Reducing taxes and charges through: the abolition of wealth (capital) tax (Vermögenssteuer) and business capital tax (Gewerbekapitalsteuer); and reduction of the solidarity supplement for eastern Germany

• Aiming to reform income taxation and social security systems in order to reduce financial burdens of the companies.

Third pillar: encouraging adaptability in business and among employees

• The Government refers to various collective agreements which promote the modernisation of work organisation, such as: collective agreements on flexible working time; collective agreements on partial retirement based on the partial retirement law; and collective agreements on flexible pay arrangements.

• Measures to improve the acceptance and legal status of part-time employment.

• Financial support for promoting in-house personnel and organisational development.

Fourth pillar: strengthening equal opportunities policies

• Equal treatment of women regarding all labour market measures.

• Improved facilities for career-break returners.

• An initiative entitled "Women give more impetus to technology", which aims to overcome gender-specific segmentation of the labour market

• In order to reconcile work and family life, every child of three years of age will have an entitlement to a nursery school place.

• Improvement of continued vocational training during parental leave.

• Various measures for promoting the integration of people with disabilities into working life, such as: a vocational rehabilitation scheme for people with disabilities; and the seriously disabled people's Act (Schwerbehindertengesetz) which requires all employers to allocate 6% of their jobs to seriously disabled persons, and to pay a compensatory levy should they fail to do so.