What measures should be used to cushion the effects of the recession on the labour market? Olaf Scholz, Federal Minister for Labour and Social Affairs, explains the policies of the government, in particular the employment of short-time work subsidies, and underlines the relevance of the "social partnership": "The joint efforts of the federal government, employers and trade unions is effective and is preventing worse things from happening. This demonstrates that with this 'social partnership' we can overcome the crisis and refute the dire prognoses." Johann Eekhoff, University of Cologne, warns against using the crisis to induce employees, with public funds, to take early retirement, for example with publicly subsidised part-time work for people approaching retirement or early retirement without reduction in retirement benefits. Minimum wages and wage subsidies are also not effective instruments for cushioning the negative effects of the crisis on the labour market. Instead, the tax system should be improved and working-time regulations be loosened. Axel Deeke, Institute for Labour Market and Occupational Research, Nuremberg, sees the short-time working scheme as the reason why the feared effects of the crisis on the labour market have not yet occurred. In the opinion of Wilhelm Adamy, DGB Executive Board member, the short-time working scheme has indeed been very successful in the short term, but it can only postpone the loss of jobs caused by the crisis and not prevent this loss completely. The time gained from this scheme should be used to safeguard jobs, for example by protecting endangered jobs, enhancing the level of qualifications, reducing social inequalities and appropriate earnings protection. Stefan Sell, Koblenz University of Applied Science, sees the present stabilisation of the functionalities in unemployment insurance, for example via a temporary prolongation of the unemployment compensation, as only a short-term strategy. In the medium and long term, we must reform the existing social insurance systems in cases of unemployment by developing an "employment insurance" system. Heike Bruch and David Maus, University of St. Gallen, present their concept of "problem-oriented management" whose application in times of crisis can help to mobilise employees.
Hans-Werner Sinn, Wido Geis and Christian Holzner
The number of people at risk of poverty in Germany stood at ca. 14 million in 2006, one million lower than in 2005. The reduction of the poverty risk ran parallel to the decline in unemployment that, because of the Agenda 2010 reforms, was one million more in western Germany in the past boom than would have been expected from a continuation of previous patterns. The growing low-wage sector is not a problem but a success of German policy. Even with very badly paid jobs, a full-time position puts one above the poverty line because a wage subsidy system has been introduced that prevents the low-skilled from having to live just from their wages. This has implications for the ongoing debate on minimum wages in Germany. Politically induced wage increases that ignore the market threaten the very people with poverty that one wants to help. Minimum wages destroy jobs and reduces the earnings of the unemployed, after unemployment compensation expires, to the social welfare level (Hartz IV) and thus beneath the poverty line. Not resorting to a minimum wage system lowers the share of people endangered by poverty because this provides social welfare recipients with subsidised jobs and thus lifts their net income above the poverty-risk threshold.
Christian Holzner, Sonja Munz and Silke Übelmesser
The emigration of citizens educated and employed in Germany has both population-statistical and labour market relevance along with fiscal policy implications. Using two exemplary emigrants - a skilled worker and a medical doctor - this study calculates the corresponding fiscal balances. The public costs connected with the publicly financed education are compared with the fiscal benefits that, in case of migration, do not accrue to the country that financed the education but to the country to which the graduates emigrate. Had they remained in Germany, they would have made a positive contribution over their working lives to the community. The results of the study show that the migration of skilled labour causes considerable burdens to the public budgets and the social insurance funds. As a result, policy-makers must create proper incentives for skilled labour to remain in Germany by a reform of the taxation and social insurance systems.
Horst Penzkofer
According to recent calculations of the Ifo Institute, the visitors and exhibitors at the Essen Fairgrounds spent a total of €410 million at fairs and exhibitions in 2008. The city of Essen profited the most, to the amount of more than €170 million, but a considerable sum (€103 million) also went to other parts of North-Rhine Westphalia. Total spending of foreign and domestic conference participants and event visitors was €67 million in 2008. The aggregate economic output effects that this triggered enabled 7,500 to be employed in Germany.
Klaus Abberger
The Ifo Business Climate for industry and trade in Germany improved once again in August. For the second time in succession the firms have assessed their current business situation clearly less negatively. However, in comparison to conditions one year ago, the situation of the firms is still considerably worse at the moment. With regard to business developments in the coming half year, the survey participants are less sceptical than in July. The German economy is slowly recovering from its recent plunge. Nevertheless, risks for a relapse still remain. The Ifo Employment Barometer for German industry and trade rose somewhat in August. Pressure on the personnel stock has eased. Nevertheless, the firms' personnel plans are still geared towards staff reduction.
In English published as: Results of the August 2009 Ifo Business Survey (Summary) (PDF, ca. 250 kb).
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