The Transformation of Employment Relations in Scandinavia and Germany: Flexicurity Rules OK?
Paper by Søren Kaj Andersen
The paper departs from the varieties of capitalism literature and discuss policy responses towards the crisis as well as more general trends of development in industrial relations systems in Denmark and Germany. Data on Sweden and Norway is included in order to embrace the broader Scandinavian development. We investigate and discuss how and if we should understand Denmark as a hybrid case; a specific blend of the coordinated market economy (CME) as well as the liberal market economy (LME). Further, the question is raised whether Germany truly is the archetypical example of the coordinated market economy? Empirically the paper is focussing on effects of and responses towards the crisis.
As the financial crisis pervaded the economy Denmark experienced one of the steepest increases in unemployment in Europe; exceeded only by hard-hit economies like Ireland, Spain and the Baltic States. Sweden also suffered from a relatively high increase in unemployment while the oil-based Norwegian economy remained rather stable. It can be argued that in a labour market sys-tem like the Danish based on low EPL and consequently high external numerical flexibility, we should expect a relatively high increase in unemployment during early phases of economic down-turns. Likewise, we should expect considerable growth in employment as the economy improves. However, even as neighbouring economies - most notably the German and the Swedish - are re-covering under regimes of more or less sustained growth, Danish companies are still hesitant to increase their workforce. Consequently, Denmark seems to be performing rather poorly.
In contrast to the Danish labour market the German as the archetypical CME is char-acterized by a high EPL level. Accordingly, the German response to the threat of mass lay-offs as the financial crisis struck the real economy was the extensive use of short-time work schemes. In other words there was a focus on internal numerical flexibility. The number of workers covered by such schemes rose and in mid-2009 around 1.5 million workers. Nevertheless, since then German companies have been able to bring by far the larger part of these workers back to full-time employ-ment while the unemployment rate is moderately decreasing; some are now talking about the ‘Ger-man job-miracle'.
Paper presented at the International and Comparative IR Section Meeting, "Employment Relations for Economic Recovery and Growth: A Contemporary Assessment of Varieties of Capitalism", LERA, 6th January 2011, Denver.