Institutional conditioning of the German labour market in the face of the global economic crisis 2008–2009

Abstract

Aim: The scientific objective of this study is an attempt to clarify the institutional aspects of the functioning of the labour market in Germany that are relevant to the response to the global economic crisis of 2008–2009. Motivation: The reaction of German labour market was totally different than during previous recessions and the explanation of the sources of this response constitutes the main motivation to undertake this study. The considerations rely on the thesis that it could be attributed to the institutional infrastructure combined with clever economic policy of the state and responsible behaviour of social partners. The economic theory suggests how an isolated institution functions, but in the real world they works in the whole institutional network. Therefore the broader context and some linkages are mentioned. Results: After a brief review of the main macroeconomic indicators and selected labour market institutions in Germany in comparison to the OECD countries, the labour market reforms undertaken in the period between 2002 and 2007 will be discussed. Then, selected on the basis of literature studies, institutional buffers of the labour market mitigating shocks are examined with particular emphasis on the instruments of internal flexibility, social partners’ behaviour and institutional connections of labour markets with other domains of economic order. The elements of institutional framework are subject to qualitative analysis backed up by available official statistical data.