Gaby Umbach, The ‘Stand-Alone’ EES (1997/98-2002): Autonomous Europeanisation Power and Embeddedness of its ‘Policy ID’ into German Traditions? in:

Gaby Umbach

Intent and Reality of the European Employment Strategy, page 356 - 392

Europeanisation of National Employment Policies and Policy-Making?

1. Edition 2009, ISBN print: 978-3-8329-4128-4, ISBN online: 978-3-8452-1247-0

Series: Studies on the European Union, vol. 1

Bibliographic information
National Adaptation to the ‘Policy ID’ of the EES 356 5.2 German Employment Policies under the EES: Deviating from the Bismarckian System, ORDO-Liberalism, ‘Global Guidance’, Neo-liberalist Monetarism, and the ‘Neue Mitte’ under the Burdens of Re-Unification? Until the inception of the EES, German labour market and employment policies lagged behind the development of the UK towards a more proactive approach (cf. chapter The development of German employment policies ever since the Bismarckian welfare state paved the way for the post-war consensus on ORDOliberalism, social market economy and political steering and later on ‘global guidance’. At the same time, a strong autonomy of social partners with the right to free collective bargaining and regulation of industrial relations emerged. After the end of the ‘Keynesian-inspired approach’ to employment policies– ceased by economic down-turn and rising unemployment–a turn towards neoliberalism was to be witnessed during the 1980s, albeit less radical than in the British case. This new supply-side neo-liberal economic concept of the conservative Kohl government focused on low state interventionism and privatisation, cutbacks in social protection as well as on the reduction of legal-administrative burdens on the economy. The 1980s, moreover, witnessed monetarist management of money supply, market de-regulation, and the decrease of company taxes in order to unleash market mechanisms to achieve economic growth. This neo-liberal supply-side approach also affected domestic employment policies with a shift towards activation measures, which–not the least due to reunification–were, yet, less successful than in the UK. During the Kohl government, reforms and change affected the tightening of control mechanisms and eligibility criteria for benefit payments, the increase of efforts to reduce long-term unemployment, the slackening of labour market provisions, the expansion of temporary employment, the extension of education, training, and qualification programmes as well as settling-in grants and public wage contributions (cf. Deutscher Bundestag 1997). Even if these policy reforms brought initial relieve in terms of increasing economic and employment growth, the consequences of re-unification, ageing society, and modernisation requirements revealed profound difficulties to adapt the German labour market to the new circumstances. They led to the increase of non-wage labour costs, a profound slow-down in economic growth and the tremendous upsurge of public debt as well as structural unemployment especially in East Germany (cf. chapter Moreover, strong trade unions forcefully protected social security standards for the employed workforce at the expense of unemployed. Additionally, missing childcare facilities and a rather work-life balance unfriendly societal environment hampered increased female participation. National Adaptation to the ‘Policy ID’ of the EES 357 5.2.1 The ‘Stand-Alone’ EES (1997/98-2002): Autonomous Europeanisation Power and Embeddedness of its ‘Policy ID’ into German Traditions? In order to face rising unemployment, the Kohl government increasingly applied a new ‘anticipating-prophylactic’ employment policy approach (cf. chapter So, German employment policies became more favourable to the activation approach in order to face the demands of re-unification and de-industrialisation and to promote employment (Thiel 2004:157). In parallel, the general need for structural reforms of the labour market became undisputed political common sense in order to raise employment rates. Yet, with this partial turn towards active labour market instruments, no real and profound change of policy paradigm towards activation was, however, to be witnessed and far-reaching reforms were long in coming. So, German employment policy reforms of the mid- and late 1990s were in no particular forerunner position in view of the ‘policy ID’ of the latter EES and were additionally burdened by the constraints of EMU membership (cf. chapter 3.3). By the time of the inception of the EES, the German labour market was characterised by a strong “insider-outsider cleavage” (Bertozzi/Bonoli 2002:6) as well as a certain bias disfavouring low skilled, non-unionised and foreign workers as well as women. Due to missing childcare facilities, the latter were to a large extent driven into part-time work (Culpepper 1999:18f. and 21). Moreover, the most vital problem was the continuing struggle with massive economic weakness based on feeble growth rates (Schulz-Nieswandt/Sesselmeier 2006:77). With these humble growth rates, economic performance was neither able to support job creation nor to decrease unemployment. In parallel to this overall mal-performance. Adapting the ‘Old Edifice’ to New Functions in 1998: The Conservative- Liberal Coalition Government’s Remedies and the First German NAP In 1997, the labour market divide caused by German re-unification indicated at a more favourable recovery in West than in East Germany, “where the progress made by manufacturing industry .. [was] still masked by the continuing process of structural adjustment in the construction industry” (Federal Republic of Germany 1998:4) and wage-productivity relations strongly impacting on structural labour malperformance. The 1998 NAP especially pointed at these particular circumstances of the German labour market as main reasons for the weakness of country’s overall employment performance compared to other EU member states (cf. ibid.). Based on the 1994 coalition government agenda (cf. Bundesregierung 1994:39ff.) and the government’s priorities of the respective year, German socio-economic policies in 1998 focused on National Adaptation to the ‘Policy ID’ of the EES 358 • financial consolidation of economic and employment growth; • support for business start-ups, SME, the increase of apprenticeship training positions and the economic development of East Germany, including the perpetuation of tax privileges on investments; • flexibilisation and de-regulation of business environment and industrial relations, including the reduction of hours of overtime and the fight against illicit work; • reform of the tax system, targeting at the decrease of non-wage labour costs and the relief of low incomes in order to ease the transition from benefit to work; • reform of the pensions system, including the introduction of a demographic offset and the spin-off of payments for incapacity for work; • further privatisation and promotion of competition for instance in the telecommunications and the energy sector; • support for research and development especially in East Germany; and • de-centralisation of labour market policies (cf. Deutscher Bundestag 1997) as well as of the Federal Employment Service (FES) (cf. Federal Republic of Germany 1998:16). In line with these government priorities, the first German NAP in 1998 also emphasised the importance of social partners and the Länder in view of domestic reforms (cf. ibid.:7). It, moreover, outlined broad supply-side reforms to especially tackle structural unemployment. Among the most prominent reform targets were efforts to give “more scope to create new jobs by means of an employment-friendly taxation policy, more competition and privatisation, cutting of red tape and simpler and faster planning procedures” (ibid.:4). The ‘Employment Promotion Reform Act’ (Arbeitsförderungsgesetz), in force since January 1998, was presented as the most important domestic initiative to enhance the activation approach (cf. ibid.:15). One of its most vital aims was to reduce long-term and youth unemployment by a strong focus on employment promotion activities–even though Germany was one of the countries with the lowest level of youth unemployment in the EU (cf. Council of the EU/European Commission 1998:66). Furthermore, a central target of the 1998 NAP was the continuation of an economic policy to positively support private investments and economic growth. Generally, the NAP priorities took up government policies outlined already in the 1994 coalition government agenda (cf. Bundesregierung 1994), such as the • wide-ranging tax reform focused on employment-friendly taxation, the removal of trading capital tax and the decrease of the re-unification surcharge (Solidaritätszuschlag); • enhancement of training activities, vocational training and academic qualification programmes as well as occupational integration contracts; • reduction of social security contributions and non-wage labour costs accompanied by the ‘Pensions Reform Act’ (Rentenreformgesetz) and a VAT increase to co-finance pensions; National Adaptation to the ‘Policy ID’ of the EES 359 • privatisation, de-regulation, and liberalisation of the economy and the labour market; and • further development of the service sector and the capital market especially by improving the accessibility of venture capital (cf. Federal Republic of Germany 1998:5ff.). In order to tackle youth unemployment, the 1998 German NAP presented the ‘National Action Plan for Vocational Training’ (Nationaler Ausbildungsplan) as the core domestic initiative. It included a ‘Joint Training Programme’ (Ausbildung im Verbund), foreseen to enhance co-operation between small companies and firms on the training of apprentices in cases, in which single companies were not able to care for sufficient training facilities. Moreover, the action plan comprised the ‘Training with Foreign Firms’ (Ausländische Betriebe bilden aus) initiative, establishing extra apprenticeship places. It introduced ‘Supra-Company Vocational Training Institutions’ that were to be financially supported by the federal budget, and aimed at increasing work experience placements and internships to gain practical job experiences. Finally, the national action plan targeted at the general improvement of labour market integration of youth through government funding (cf. ibid.:9ff.). This bundle of measures, supported by several Länder initiatives (cf. ibid.:10), was intended to form an extensive reform package for a modern training system to combat youth unemployment. Additionally, a “pilot project ‘Youth Work for the World of Work’ (Arbeitsweltbezogene Jugendsozialarbeit’) … [was set up to test] new ways of improving the occupational and social integration of disadvantaged young persons” (ibid.:11) from 1998 to 2001. To reduce the number of early school leavers, the ‘National Action Plan for Vocational Training’ included measures to cut school drop-out rates by 50 pp until 2002. These measures should be further developed by the Länder in cooperation with the social partners and the federal government. Moreover, a ‘School-Business Workshop’ programme (Arbeitskreise Schule- Wirtschaft) was announced to reinforce co-operation between local businesses and schools (cf. ibid.:21). In view of vocational training, in which the federal government’s competences are limited and aim “to regulate the training regime, in consultation with the Länder and the social partners, and to promote improvements in the training on offer” (ibid.:22), the 1998 NAP presented the 1997 reform of the vocational training system as main instrument to support modernisation, flexibilisation and differentiation of apprenticeships and the dual-training system as well as job profiles. In this context, 11 new trades were planned to be created and 19 existing ones to be modernised in 1998 (cf. ibid.). Apart from existing activation, work promotion and wage subsidy measures as well as job creation and structural adjustment plans targeting at prevention, the ‘Social Security Code III’ (Sozialgesetzbuch III, SGB III) was regarded as a starting point to ensure intensive placement and guidance for those at risk of long-term unemployment, including early intensive intervention after six months of unemployment (cf. ibid.:12). The SGB III, moreover, includes measures to encourage structural adjustment of conditions for entrepreneurship in the East German Länder, National Adaptation to the ‘Policy ID’ of the EES 360 instruments to de-centralise and adapt as well as, from August 1999 onwards, also additional measures to encourage regular employment. In view of long-term unemployment, furthermore, the ‘Occupational Integration Contract’ (Eingliederungsvertrag) was introduced to facilitate the return of long-term unemployed into the labour market. It comprised financial support for employers in case of hiring long-term unemployed (cf. ibid.:13). At the same time, the ‘Federal Programme for Integration of Long-term Unemployed’ (Bundesprogramm zur Eingliederung von Langzeitarbeitslosen) was prolonged until 2001. To increase efficiency of job placement, the FES had been enabled since January 1998 “to entrust suitable third parties with the placement of unemployment assistance recipients, who are longterm unemployed or at risk of becoming so” (ibid.). Successful job placement, lasting more than six months, was co-funded by the federal budget. To increase activation, the SGB III instruments of mobility allowances (Mobilitätshilfe) and worker’s allowances (Arbeitnehmerhilfe) reimburse costs related to the take-up of work, such as new working tools and clothes, removal and travel costs or a publicly funded top-up of wages in case of transition from benefit to temporary work or fixed-term contracts. These instruments were presented as a step from passive to active labour market instruments (cf. ibid.:15). Furthermore, the reform of the ‘Federal Social Benefit Act’ (Bundessozialhilfegesetz) enabled social benefit agencies to offer wage contributions, additional measures or other financial support to employers to encourage employment and job creation. Long-term unemployed were also targeted to receive financial, administrative, and training support in case of business start-up (cf. ibid.:16). Moreover, the Länder were reported to “make extensive use of ESF funds to support extra vocational training, preparatory training, guidance, and counselling and to provide recruitment subsidies for the long-term unemployed” (ibid.:12). In view of lifelong learning, social partners substantially contributed to government initiatives to create additional training opportunities. They started or continued initiatives such as the development and introduction of “forms of vocational preparation closely associated with the business environment” (ibid.:17f.), the ‘Getting started programme’ (Starthilfeprogramm) in the chemical industry (offering practical experience for school leavers), the creation of extra training places, ‘Regional Training Alliances’ in areas with an insufficient quantity of training places and joint efforts to “modernise existing job profiles and create new occupations” (ibid.:18). Social partners also contributed to the intensification of self-managed learning and on-the-job-training especially for un- and low-skilled people. To encourage lifelong learning, self-employment and business start-ups, the 1996 ‘Career Advancement Support Act’ (Aufstiegfortbildungsförderungsgesetz), also known as the Meister-BAföG, was presented as a main tool for financing further qualification and training in crafts industries, granting financial support to potential entrepreneurs (cf. ibid.:19). These activities were to be “further promoted by various activities such as the Continuing Education Week (Woche der Weiterbildung), the ‘98 Learning Festival (Lernfest ‘98), think-tanks, promotion of national and international conferences, the Concerted Action Project on Continuing Education (Konzer- National Adaptation to the ‘Policy ID’ of the EES 361 tierte Aktion Weiterbildung), workshops and pilot projects” (ibid.). Yet and generally related to the lifelong learning aspect of the EES, the 1998 German NAP also underlined the government’s position “that further training policy must reflect the principles of autonomous responsibility, self-organisation and subsidiarity .. [with t]he aim .. to contribute to fostering a new learning culture in society” (ibid.). Moreover, encouraging self employment and SMEs start-ups, the 1998 German NAP highlighted “the areas of risk capital, innovation and promotion of foreign trade” (ibid.:26) as major government priorities to further promote an entrepreneurial society. In line with these priorities, tax privileges for capital investment companies, particular support for ICT businesses, increase of risk capital, new insolvency rules as of 1999 as well as training and counselling services constituted the main pillars of the government’s support in 1998 (cf. ibid.:26f.). To cut overhead costs on labour, policy reforms broadly aimed at the decrease of the overall burden on business and especially on SME’s. The introduction of a demographic factor to the ‘Pensions Reform Act’ was announced to ensure the balance between pensions’ and pensions contributions’ increase in view of the ageing society through co-funding by federal subsidies and a share of the increased VAT rate as of April 1998 (cf. ibid.:24). Moreover, the ‘Contributions (Easing) Act’ related to the health insurance system was presented to reduce non-wage labour costs by increasing patients’ contributions to treatment and medicines and by cutting sick pay. The same principle was applied in case of the ‘Continued Pay Act’ (Lohnfortzahlung im Krankheitsfall), with payments in case of non-occupational sickness to be reduced to 80 pp of net income (cf. ibid.:25); a measure that was immediately revoked by the new coalition government in 1998. Additional tax reforms concentrated on the reduction of non-wage labour costs from the historic high of 42 pp in 1997. Among the changes presented were the reduction of the re-unification surcharge to 5.5 pp in 1998 as well as the income tax reform to be initiated after the 1998 elections (cf. ibid.:29). In view of the modernisation of work, the 1998 NAP especially referred to the principle of collective bargaining and the results of a magnitude of collective agreements to explain the limited competences of the government in this area. Within these agreements, flexibilisation instruments such as part-time work, working time accounts or annual working times were already regulated for some industrial branches (cf. ibid.:31). Additionally, collective agreements related to part-time work of older workers (Altersteilzeit) were introduced to ease the transition from work to retirement with flexible pay and working-time arrangements to improve the overall labour market performance and the labour supply side. The gradual agreement of wage flexibilisation added to these instruments agreed between the social partners before and during 1998. Moreover, the 1998 ‘Law on the social security of flexible working-time arrangements’ served “to remove legal obstacles which had so far militated against the more widespread use of sensible forms of working-time patterns” (ibid.:33). In order to promote equal representation within the labour market, the 1998 ‘Employment Promotion Reform Act’ was presented to have “featured the first ever National Adaptation to the ‘Policy ID’ of the EES 362 special legal provision on opportunities for women, whereby job centres and other establishments are required, in all they do, to give equal status to women on the labour market and to eliminate any disadvantages. At the same time, professional women’s affairs officers were appointed at all levels of the labour administration” (ibid.:35). The 1998 JER underlined the low level of job creation as one of the main weaknesses of the German labour market since 1993 (cf. Council of the EU/European Commission 1998:65). Employment policies were assessed to concentrate too strongly on the development of the economic framework (cf. ibid.:66), while they neglected important employment and social policy aspects. The German NAP was, moreover, evaluated to focus strongly on the employability pillar, with missing quantitative targets and timeframes for implementation especially in the area of long-term unemployment in which, yet, a sufficient array of activation measures were acknowledged to exist. The ‘Employment Promotion Reform Act’ was recognised to be the centrepiece of reform, seeking to balance the preventive approach and the reduction of long-term unemployment (cf. ibid.:66). Social partner contribution and the integration of the Länder was assessed to be beneficial for the overall domestic development (cf. ibid.:68). Table 35: Main German Socio-Economic and Employment Policies and Innovations introduced in 1998 Policy / Initiative Targeting at Thematically linked to the EES’s … pillar Classed under EG Employment Promotion Reform Act Unemployed Employability 1, 2, 3, 8, 14, 16 National Action Plan for Vocational Training Unemployed, Youth Employability 1, 6, 7 Social Security Code, SGB III (Long-term) Unemployed Employability 2, 3 Occupational Integration Contract (Long-term) Unemployed Employability 2, 3 Federal Social Benefit Act (Long-term) Unemployed Employability 3 Contributions (Easing) Act Employees, Employed Entrepreneurship 8 Company Tax Reforms Businesses Entrepreneurship 9, 11 Law on the Social Security of Flexible Working-Time Arrangements Employees, Employed Adaptability 13, 14 Source: Own compilation based on chapter and 3.2.2. National Adaptation to the ‘Policy ID’ of the EES 363 The 1998 German NAP presented the conservative-liberal coalition government’s priorities and remedies to adapt the old edifice of German employment policies to the new approach of the EES. However, apart from outlining only few, yet, important reforms–such as the ‘Employment Promotion Reform Act’ and the ‘National Plan for Vocational Training’–the 1998 NAP largely concentrated on earlier policies and presented them as responses to the EES. This practice raises cause for suspicion of no real adaptation to the EES’s ‘policy ID’ to have taken place under the ‘old’ German government. The NAP broadly focused on the employability and entrepreneurship pillar and sketched out the government’s efforts to enhance and stabilise the overall economic performance, while, in parallel, it was partially cutting social security provisions in order to foster job creation and business performance. Hence, as in the case of the UK, the first year under the EES witnessed asymmetric ?convergence (similarity towards a common model) without changes by policy transfer or diffusion. ‘Tearing down Old Walls’ and ‘Building the Base’ in 1999: The ‘Neue Mitte’ and the Start of Its Socio-Economic Reforms The change of government towards a social democrats-green coalition in late 1998 constituted a turning point towards a combination of supply- and demand-side policies to promote economic growth and job creation in line with the ‘Neue Mitte’ ‘Advance and Demand’ (Fördern und Fordern) approach (cf. chapter This turn favoured a stronger emphasis on active labour market policies than under the previous government to advance employability through training. The Green’s focus on ecological innovation to boost sustainable economic and employment growth added to these characteristics. This new policy approach that–due to the combination of social-democratic and green policy priorities–already back then was rather close to the latter Lisbon strategy, was laid down in detail in the 1998 coalition agreement focusing on • renewal of the social and ecological market economy, sustainably uniting economic, employment and environmental aspects; • new sustainable economic approach, combining supply- and demand-side policies, including the ecological modernisation of the economy; • increase of female participation and active labour market instruments, including interweavement of employment and structural policies; • consolidation of public finances and reduction of public debt; • socially just, extensive and three-step income and company tax reforms inspired by the ecological tax reform, including the increase of child allowance and the reduction of non-wage labour costs from 42.3 pp to less than 40 pp through taxation of energy consumption; • extension of childcare facilities and improvement of reconciliation of work and family life; National Adaptation to the ‘Policy ID’ of the EES 364 • reform of the pensions system, including the reform of incapacity pensions; • establishment of the ‘Alliance for Jobs’ (cf. chapter to advance the cross-societal consensus on employment and labour market policy reforms; • new initiatives to fight youth unemployment with special focus on East Germany; • promotion of education, research and sciences through increased public funding and reduction of administrative burdens; • reinforced support for SMEs, crafts and business start-ups, including reforms of venture capital markets; and • consolidation of employees’ rights (SPD/BÜNDNIS 90/DIE GRÜNEN 1998:I, III, V, VI, VII; cf. Deutscher Bundestag 1998:47-67). In line with these priorities, the new coalition government emphasised the further development of the European Social Union, including the establishment of an European Employment Pact to co-ordinate the Luxembourg, the Cardiff and the Cologne process and the integration of additional quantitative targets into the EGs (cf. ibid.:XI; Deutscher Bundestag 1998:65). As the newly institutionalised forum for deliberation on German labour market reforms, the ‘Alliance for Jobs’ (Bündnis für Arbeit), initiated in 1998, contributed to the implementation of reforms. Concrete reform proposals presented in the 1999 German NAP strongly reflected the new coalition government’s policy orientation towards the activation and prevention approaches as well as towards gender mainstreaming at the expense of passive benefit instruments. In order to tackle youth unemployment, the ‘ERP Training Places Programme’ was assessed to have positively contributed to the provision of 7,000 new SME vocational training places over the past reporting period (cf. ibid.:13). It was continued in 1999 (cf. ibid.:16). Also the ‘Vocational Training Counsellor’, the ‘Apprenticeships Procurer’ and the federal ‘Developer of Training Places East’ programmes were extended for another period, the latter until 2001 (cf. ibid.). Moreover, a new ‘Training Places Programme for the new Länder’ (Ausbildungsplätze Ost) was agreed between the federal government and the Länder to be operational in 1999 in order to continue the previous year’s activities by offering and financing 17,500 extra training places. Länder initiatives further amended this programme by providing for nearly 8,300 additional training places (cf. ibid.:13). As a centrepiece to reduce youth unemployment, the ‘Immediate Programme for the Reduction of Youth Unemployment’ (Jugendsofortprogramm/JUMP) was set up to offer 100,000 young people training or job qualification places in 1999 (cf. ibid.:14) in order to prevent long-term unemployment. JUMP’s main targets were to increase incompany apprenticeships, establish training programmes for applicants not placed so far, offer vocational post-qualification and additional qualification, provide for wage cost subsidies for unemployed and support job creation as well as social counselling (cf. ibid.:15). Especially targeting at disadvantaged, disabled, foreign and female young persons, JUMP was assessed to have been a success already after four months of lifetime. “By the end of April 1999, 117,000 young people (42% of National Adaptation to the ‘Policy ID’ of the EES 365 whom were women) had commenced measures within the framework of this Emergency Programme. 41% of them came from the new Länder” (ibid.:15). To prevent long-term unemployment, the participation in employment promotion measures was facilitated for those in danger of becoming long-term unemployed. Moreover, the assistance given to companies employing particularly indigent persons was further concentrated on long-term unemployed, low-skilled and, geographically, on East Germany. The prescribed unemployment period for older workers to receive integration subsidies was reduced from 12 to six months (cf. ibid.:20). Additionally, the federal ‘Programme for the Long-term Unemployed’ was prolonged until 2001. Targeting to enhance activation, the 1999 NAP announced the increase of federal expenditure on active labour market instruments to 45.3 bn DM. It extended “structural adjustment measures with a clear shift from earning substitution benefits (wage supplements) to funding for active measures” (ibid.:26) from East Germany to the entire Republic as of August 1999. The extension included the support for infrastructural adjustment. Various job creation schemes of the Länder such as the support for re-integration through non-profit fixed-term contracts or temporary work– as in the case of the UK Environmental Task Force–for difficult to place unemployed added to these activities (cf. ibid.). In view of tax reforms, various measures aimed at reinforcing incentives to take up work, at the increase of investments through unburdening labour (i.e. the reduction of non-wage labour costs), and at the taxation of energy consumption in line with the ecological tax reform (cf. ibid.:28). The three-step ‘Tax Reform Act 1999/2000/2002’, including the increase in child allowance, was adopted to lower income and corporation taxes. Main instruments were the “gradual reduction in the basic rate of income tax [to 19.9 pp in 2002] and the increase in the basic allowance up to [DM 14,000/single person, DM 28,000/married persons in] the year 2002 .. provid[ing] further incentives for people to take on legal employment in the lowpaid area. The reduction of the highest rate for business earnings [to 43 pp in 2002] and the rate of corporation tax for withheld profits [to 40 pp in 1999], i.e. money available for real investments will improve investment possibilities” (ibid. and 53). Moreover, the top tax rate was planned to be reduced to 48.5 pp in 2002 (cf. ibid.:53). Company taxes were announced to be reformed by the introduction of a minimum tax rate of 35 pp to be operational in 2000. Moreover, the ‘Ecological Tax Reform’ of April 1999, accompanying the reduction of non-wage labour costs through the taxation of energy consumption, was assessed to support the overall labour market reform (cf. ibid.:29 and 53). Linked to job creation and lifelong learning, the 1999 NAP introduced the new action programme ‘Innovation and Jobs in the Information Society of the 21st Century’ to be launched in autumn 1999. Additionally, the modernisation of the dual vocational training system was pushed forward by the structural modernisation of curricula and the flexibilisation of training, accreditation of new vocations, support for low-skilled and disadvantaged young persons (cf. ibid.:38f.). It was, moreover, assisted by the revision of financial support instruments and the “improvement of National Adaptation to the ‘Policy ID’ of the EES 366 the translatability of the various qualifications in the labour market by modernising Chamber of Commerce regulations governing further training and replacing them with legal directives of the federal government” (ibid.:35). Additionally, ‘Regional Networks for Future Training’ were announced to be established and the ‘Initiative on School-Business/World of Work’ was announced to be prepared as a joint programme of the federal government, the Länder and the social partners to tighten contacts between businesses and schools (cf. ibid.:37). New instruments introduced in the 1999 German NAP to encourage selfemployment and business start-ups were the ‘InnoNet’, ‘InnoRegio’ and the ‘Innovation Competence’ (Innovationskompetenz) programmes (cf. ibid.:47). ‘InnoNet’ supports research institutes’ networking in order to reduce costs and foster transfer of research results into the economy, while ‘InnoRegio’ especially targets at the development of research and innovation networks in East Germany. ‘Innovation Competence’ particularly supports co-operation between SMEs and research institutes (cf. ibid.). Additionally, the federal government announced the establishment of an ‘Innovation Fund’ in 1999 to especially support innovation in research and the ‘EXIST’ programme “to offer more concentrated support for people wishing to set up new companies from universities and research institutes” (ibid.). Moreover, to promote job creation at subnational levels, the 1999 NAP announced to link “regional, economic, women-in-work and general labour market policies .. to be implemented in the shape of an initiative called the ‘Regional Economic Assistance via Citizenship Participation’ by the federal government, the Länder and local districts in a development approach to create new jobs” (ibid.:49). Aiming to increase equal opportunities in the labour market, the establishment of the new ‘Women onto the Net’ programme was foreseen to ensure female participation in the information society (cf. ibid.:51). Moreover, the 1999 German NAP highlighted the relevance of both the gender mainstreaming approach and the targeted support of women at work and within society (cf. ibid.:60). The former was highlighted to be a general and horizontal government principle. The latter was declared a special aim of the new social democrats-green coalition government. As new initiatives, the 1999 NAP presented the ‘Women and Work’ initiative, targeting at equality of both sexes, especially promoting women and financially supporting best practices, the ‘Total E-Quality’ and the ‘Audit Family and Job’ programmes. The latter two integrate equal opportunities indicators into businesses’ and public administrations’ quality management (cf. ibid.:61 and 63). Adding to this area, provisions for child allowance and parental leaves were to be improved in 1999 especially through the ‘Women and Work’ programme, establishing inter alia more flexible joint parental leave provisions. Additionally, with the programme every three-year old child was guaranteed a kindergarten place (cf. ibid.:65) and the ‘National Quality Initiative in the System of Day Care Centres’ was announced to start in 1999. Due to the allocation of related competences to the Länder level, federal engagement in this area was, yet, underlined to be partially limited (cf. ibid.:66) to campaigning and information as in the case of the planned programmes ‘Men and Family’ or ‘Women and Family-friendly Company’ (cf. ibid.:67). National Adaptation to the ‘Policy ID’ of the EES 367 The 1999 JER welcomed the progress made towards fighting youth unemployment and the strengthened activation approach of the new German government. It also positively recognised the role of the Alliance for Jobs and the strong involvement of the social partners, the subnational level, as well as equality bodies for the development of future reforms in Germany, especially in the area of lifelong learning policies. Overall progress was assessed to be made in view of the intensification of active labour market instruments to combat long-term unemployment and to improve the situation of young people as well as regarding the German gender mainstreaming approach perceived to “present.. a particular comprehensive approach” (ibid.:II,17). Also other policies to enhance female participation were assessed in a positive way. Yet, implementation targets and plans were asked to be provided and statistical data on employment performance and budgetary provisions should be made available in the future in order to ensure and control the delivery of the policies adopted. Further points of criticism were the still substantial gender pay gap, even if progress in this area was acknowledged (cf. ibid.), and the missing reenforcement of existing policies to improve the situation of older workers. Additional efforts to enhance job creation in the service sector should be undertaken. Finally, the persistently high level of long-term unemployment and the weak employment performance of East Germany gave cause for concern (cf. ibid.). Table 36: Main German Socio-economic and Employment Policies and Innovations introduced in 1999 Policy / Initiative Targeting at Thematically linked to the EES’s … pillar Classed under EG ERP Training Places Programme Unemployed, Youth Employability 1 Vocational Training Counsellor Unemployed, Youth Employability 1 Apprenticeships Procurer Unemployed, Youth Employability 1 Developer of Training Places East Unemployed, Youth Employability 1 Training Places Programme for the new Länder Unemployed, Youth Employability 1 Immediate Programme for the Reduction of Youth Unemployment, JUMP Unemployed, Youth Employability 1, 7 Programme for the Long-term Unemployed Long-term Unemployed Employability 2 Ecological Tax Reform Employees, Employers, Families Employability, Entrepreneurship 4, 10, 14 National Adaptation to the ‘Policy ID’ of the EES 368 Policy / Initiative Targeting at Thematically linked to the EES’s … pillar Classed under EG Innovation and Jobs in the Information Society of the 21st Century Unemployed, Employees, Employers Employability, Entrepreneurship 6, 13 InnoNet SME, Research Entrepreneurship 11 InnoRegio SME, Research Entrepreneurship 11 Innovation Competence SME, Research Entrepreneurship 11 Innovation Fund Research Entrepreneurship 11 EXIST Universities, Graduates, Self- Employed, Business Start-up Entrepreneurship 11 Regional Economic Assistance via Citizenship Participation Regions, Unemployed Entrepreneurship 12 Women onto the Net Women Entrepreneurship 13 Total E-Quality Women Equal Opportunities 19, 21 Audit Family and Job Women, Families Equal Opportunities 19 Women and Work Women Equal Opportunities 20 National Quality Initiative in the System of Day Care Centres Women, Families Equal Opportunities 21 Men and Family Women, Families Equal Opportunities 21 Women and Family-friendly Company Women, Families Equal Opportunities 21 Source: Own compilation based on chapter and 3.2.2. While the 1998 NAP focused on presenting the previous government’s remedies to adapt the old edifice to the EES, the 1999 NAP tore down old walls and started to strategically re-build the base for German policies. It presented the new government’s shift towards a combination of supply- and demand-side policies, the sustainable renewal of the economy, the turn towards activation and training measures, key reforms such as the ecological tax reforms and new instruments to improve the situation of young people. Moreover, the new government’s approach on gender mainstreaming and the increase of female participation were highlighted and owed much to the Green party’s priorities on equality. Another focus of the 1999 German NAP was laid on improving and extending education and training in order to increase employability. Several programmes, such as JUMP, ‘Innovation and Jobs in the Information Society of the 21st Century’, the ‘Training Places Programme for the new Länder’ and ‘Developer of Training Places East’ point in this direction. The 1999 German NAP was more strategically oriented than its predecessor. It sketched out key priorities related to the further development of European provisions, such as the introduction of a European Employment Pact, and highlighted the National Adaptation to the ‘Policy ID’ of the EES 369 strong interweavement of federal and Länder level activities. With the rather balanced adoption of policies under three of the four pillars of the EES, ?-convergence (similarity towards a common model) became less asymmetric than in 1999, even if the adaptability pillar was still lagging behind. Cost Control to Continue Re-Construction in 2000: Laying the Budgetary Grounds for Further Socio-Economic Reforms While generally acknowledging the slight economic recovery over 1998 and 1999 with a break in employment decrease (cf. Council of the EU 2000b:Annex III), the first supranational recommendations on the implementation of member state’s employment policies in 2000 urged Germany to focus on remaining structural shortcomings, such as a continuing loss of employment over the 1990s, huge regional disparities related to employment performance with a comparatively bad record for East Germany, persistently high long-term unemployment rates, unused employment creation potential in the service sector, and low employment rates of older workers (cf. ibid.). The 2000 recommendations advised Germany to further reinforce its preventive and active employment policy approach and to increase early intervention activities to prevent long-term unemployment. Germany was recommended to eliminate obstacles to take up work deriving from the tax and benefit systems. By doing so, labour participation especially of older workers ought to be encouraged by a comprehensive reform of the early retirement scheme. Additionally, Germany was urged to further reduce non-wage labour costs. As in the case of the UK, Germany was finally recommended to improve its statistical data base by the preparation of a quarterly Labour Force Survey (cf. ibid.:III.1-5). As did the UK, Germany explicitly replied to these recommendations in its 2000 NAP. Related to strengthening its preventive approach, Germany referred to the ‘Employment Promotion Reform Act’, containing the national framework for early intervention, which was increasingly applied to long-term unemployed (cf. Federal Republic of Germany 2000:45). Job creation in the service sector was explained to be embedded in the government’s overall economic and tax reform strategy, comprising the reduction of non-wage labour costs, the improvement of the overall business environment and the reduction of administrative burdens (cf. ibid.). Concerning the integration of older workers into the labour market and the further reform of tax and benefit systems, the 2000 NAP stated to have followed the recommendations with its tax reform initiatives. Moreover, the government obliged German policy reforms to focus on these topics also in the future (cf. ibid.:45). The 2000 NAP took up the government’s priorities outlined in the June 1999 ‘Future Programme 2000’ (Zukunftsprogramm 2000), comprising the • ecological tax, company tax and pensions reforms to relief the active workforce, their families and to reduce non-wage labour costs; National Adaptation to the ‘Policy ID’ of the EES 370 • rigid budget consolidation policies following the examples of the UK, France, Sweden or Denmark; • further investment in education and research activities; • strengthening active labour market instruments and (financial) support for reintegration into work; • further reduction of youth and long-term unemployment through activation measures (cf. Deutscher Bundestag 1999:4649-4753). With these priorities, the 2000 German NAP concentrated on the development of a sustainable strategy for growth and employment creation based on the “conflict-free interaction of measures at the microeconomic level in a dynamic macroeconomic environment” (Federal Republic of Germany 2000:4). It focused on further economic reforms to secure investments in training, research, education, and science in order to increase employability and on structural reforms of product and factor markets in order to strengthen competition. In parallel, it retained the horizontal gender mainstreaming approach of the previous year (cf. ibid.:4f.). To support employability, the FES was announced to be structurally and procedurally improved by the ‘Labour Office 2000’ (Arbeitsamt 2000) initiative aiming at the improvement of service delivery (cf. ibid.:12), at a “team organisation with a holistic orientation, and ... a decentralisation of the services offered” (Federal Republic of Germany 2001:34). In order to fight youth unemployment, the 1999 JUMP programme was continued (cf. Federal Republic of Germany 2000.:13; Deutscher Bundestag 1999:4645), training programmes and training places initiatives for East Germany were announced to be financially extended as was the ‘Creating training places’ initiatives (cf. Federal Republic of Germany 2000:14). Moreover, the Alliance for Jobs “reached agreement on a training consensus” (ibid.:12) to bring more young people into vocational training. Long-term unemployment was targeted by the increase of counselling personnel by 700 new posts, the intensification of job placement activities and the extension of the eligibility criteria for active employment policy measures (cf. ibid.:14). To enhance efforts of early intervention, “[p]articipation in a job creation scheme is now possible already after a period of unemployment of six months within a reference period of twelve months or in case of long-term unemployment. Integration subsidies for older workers may now be granted after a period of unemployment of six months already instead of the previously prescribed twelve months” (ibid.). Additionally, a pilot project with the Netherlands was launched to explore new methods to prevent long-term unemployment and the federal ‘Special Programme for the Reintegration of Long-term Unemployed Persons’ was prolonged until 2002 (cf. ibid.). The adjustment of the German social security system comprised adaptation to the population’s changing age structure, life expectancy and heterogeneous working life biographies as well as adaptation of the relationship between wage replacement benefits and social assistance and between these instruments and wages/salaries (cf. ibid.:17). As a fundament for these measures, the ‘Tax Reform 2000’ (Steuerreform National Adaptation to the ‘Policy ID’ of the EES 371 2000) further developed and consolidated the 1999 tax reform by introducing a company tax reform to be operational in 2001 (cf. ibid.). The reform provided incentives for the labour market and strengthened individual initiatives to find new jobs. Basic income taxes were decreased to 22.9 pp, while the top income tax rate stood at 51 pp in 2000. Additionally, tax revenue on energy consumption served to decrease non-wage labour costs. Furthermore, both the child allowance and the child-related basic allowance were increased to support families (cf. ibid.:33). In January 2000, the basic income tax rate and the top rate fell to 19.9 pp and to 48.5 pp respectively. Further decreases were announced for 2003 and 2005 (cf. ibid.). An additional reduction of tax burden on low wages was examined (cf. ibid.:34). Moreover, as requested by the 2000 recommendations, the benefit system was examined in order to remove “disincentives which may discourage labour market participation especially of older workers” (ibid.:18). Yet, apart from the entering into force of the ‘Law on Development of Part-Time Work of Older Workers’ (Gesetz zur Fortentwicklung der Altersteilzeit) in January 2000, no concrete policy instruments were introduced. Further promoting lifelong learning activities, the social partners enhanced their co-operation to “ • create more training places in companies … • [p]ropose new professions … • [i]ncrease the training volume in the new IT and media professions to 40,000 training places by the end of 2000 … • [i]ncrease the participation of young women in training for these professions” (ibid.:20). Adding to this reenforcement were activities to create new professions and increase job creation in booming industries, such as the multimedia and service sector. Within the 2000 NAP, also new lifelong learning initiatives were announced “to guarantee that all individuals develop a willingness for lifelong learning, obtain the necessary qualifications for lifelong learning, and use informal educational opportunities in their daily lives as well as at work” (ibid.:21). These new initiatives included an action programme ‘Lifelong Learning for Everybody’, with its subprogrammes ‘Network for Lifelong Learning’ and ‘Culture of Learning and Development of Competence’. The action programme merged the federal government’s lifelong learning initiatives into one coherent framework that served to continue the 1999 programme ‘Innovation and Jobs in the Information Society of the 21st Century’ (targeting at the enhancement of women’s ICT qualifications and at the better reconciliation of family and work life) and ‘Lifelong Learning – Further Education as a Basic Need’ related to the improvement of vocational training (cf. ibid.:21f.). Additionally, the Länder announced similar ‘Lifelong Learning’ programmes at subnational level and the social partners announced to extent the use of ‘job rotation’–publicly co-financed substitution of personnel in training measures by unemployed during the training period–following the Danish example. National Adaptation to the ‘Policy ID’ of the EES 372 Focusing on the reduction of early school leaving, the Länder announced to continue their activities presented in the 1999 NAP, including new “[r]emedial classes, practical lessons, and special vocationally-oriented measures such as work experience and projects, as well as a training and preparatory year … offered to youths with learning or performance deficits” (ibid.:23). Moreover, the federal government announced to further develop the dual vocational training system by modernisation and extension of existing instruments. Yet, apart from the increase of financial support for ICT, new initiatives to increase the qualification of women in ICT, such as ‘Female Teacher and Female Pupils on the Web’ and the extension of the 1999 initiative ‘Women on the Web’ (cf. ibid.:25), no concrete new programmes were announced. In order to reduce administrative burdens, the ‘Modern State – Modern Administration’, ‘MEDIA@Komm’, ‘Virtual City Halls’ and ‘Virtual Market Places’ programmes were presented to modernise the public administration and administrative procedures from 2001 onwards. They aimed to reduce burdens on the economy and to facilitate business start-ups (cf. ibid.:28). Additionally, the ‘EXIST-SEED’ programme was made “available to people enrolled in EXIST-universities who are in the preparatory stage of setting-up new companies, to cover their living expenses” (ibid.:29). Particularly women were to be encouraged to start-up business and the Länder set up projects in schools to get pupils acquainted to entrepreneurial activities. Moreover, in order to promote job creation at subnational level, the Alliance for Jobs was announced to be extended to the regional level (cf. ibid.:31). To support job creation particularly in the service sector, the 2000 German NAP announced new federal research and development initiatives, such as ‘Innovations Billion’, ‘Bio- Regio-Initiative’, ‘Innovation Competence’. Moreover, the federal government engaged in creating new training vocations in the service and ICT sector, in modernising existing vocations, in supporting the further development of risk capital markets for business start-ups and in opening markets as well as privatisation (cf. ibid.:31f.). In order to support adaptability through in-house training, the new research and development programme ‘Proficiency Development for Economic Change – Structural Changes of Further Training in Companies’ was launched to improve business and regional development (cf. ibid.:38). Concerning the modernisation of work organisation, as did its predecessor, also the 2000 German NAP referred to the domestic collective bargaining practice and highlighted the intention to integrate working time accounts in future collective agreements until 2002 (cf. ibid.:36). To further improve the domestic gender mainstreaming approach of the federal government in line with the announced ‘Equality Opportunities Act’, the 2000 NAP announced “to include a new paragraph ‘Equality Policy’ in the upcoming revision of the joint standing orders of the Federal Government and to conduct a check for compatibility with equality principles” (ibid.:39). Moreover, “[i]n its business policy targets 2000 the Federal Employment Service adopted the dual strategy of the employment guidelines, i. e. ‘specific action to improve equal opportunities’ plus ‘gender-mainstreaming approach for all fields of action’ and at the same time defined National Adaptation to the ‘Policy ID’ of the EES 373 target values for each individual field” (ibid.:40). To further enhance equal opportunities within the labour market, the federal government announced to review the ‘Parental Leave Act’ in 2001, launched the ‘New Male Image’ campaign and held the ‘Growing up 2000’ convention of childcare facilities in Germany in autumn 2000 (cf. ibid.:42). The 2000 NAP, furthermore announced to support the provision of adequate childcare facilities, increase the part-time sector, support the further flexibilisation of work organisation, and enhance the participation of those returning to work in activation measures (cf. ibid.:43). Yet, no concrete proposals were presented. The 2000 JER emphasised that German “economic growth was not strong enough to improve job creation and employment growth [, which] remained the lowest in the EU” (Council of the EU/European Commission 2000:II,19). Moreover, employment rates of older workers were lingering at too low a level and the poor employment performance of East Germany gave additional cause for severe concern. The JER especially bemoaned long-term unemployment to remain comparatively high especially in the segment of older workers. However, the extension of the individual pathway approach–enshrined in the SGB III and presented as a response to the 2000 recommendations–was generally assessed to be in the position to support the decrease of long-term unemployment (cf. ibid.:II,21). The activation-prevention policy mix and reinforced efforts under the employability and entrepreneurship pillar were assessed to have improved compared to previous years (cf. ibid.:II,19f.). Fiscal reforms and the consolidation of public finances were perceived to be progressing especially with the ‘Tax Reform 2000’ and the company tax reform (cf. ibid.:II,20f.), while in parallel the tax burden on labour again increased due to missing reforms of the social benefit systems. Also assessed positively, “the economic and social policy agenda undertakes to link employment, education, training, research and innovation policies, in order to raise, in particular, investment in R&D and human resources, to increase capital investment and to provide for the necessary infrastructure” (ibid.:II,20). Moreover, the higher retirement age and the decrease of early retirement pensions were evaluated positively (cf. ibid.:II,21). Job creating initiatives in the service sectors were welcomed and assessed to “show encouraging results” (ibid.), even if efforts still needed to be reinforced. As future challenges to meet the ‘policy ID’ of the EES, the 2000 JER identified the increase of training especially related to ICT skills, the further reduction of nonwage labour costs, the development of an overall national strategy for lifelong learning comprising quantitative targets, a critical evaluation of employment policies with a special view to the East German Länder and the fight against long-term unemployment (cf. ibid.:II,19f.). National Adaptation to the ‘Policy ID’ of the EES 374 Table 37: Main German Socio-economic and Employment Policies and Innovations introduced in 2000 Policy / Initiative Targeting at Thematically linked to the EES’s … pillar Classed under EG Labour Office 2000 Unemployed Employability 1 - 9 Tax Reform 2000 Employees, Employers, Families Employability, Entrepreneurship 4 - 14 Lifelong Learning for Everybody Employees, Unemployed Employability 6 Lifelong Learning – Further Education as a Basic Need Employees, Unemployed Employability 6 Female Teacher and Female Pupils on the Web Employees, Pupils Employability 8 Modern State – Modern Administration Employees, Self-employed Entrepreneurship 10 MEDIA@Komm Employees, Self-employed Entrepreneurship 10 Virtual City Halls Employees, Self-employed Entrepreneurship 10 Virtual Market Places Employees, Self-employed Entrepreneurship 10 EXIST-SEED Universities, Graduates, Self-Employed, Business Start-up Entrepreneurship 11 Innovations Billion Service Sector, Job Creation, Business Start-up Entrepreneurship 13 Bio-Regio-Initiative Service Sector, Job Creation, Business Start Entrepreneurship 13 Proficiency Development for Economic Change – Structural Changes of Further Training in Companies Employees, Employers Adaptability 17 Source: Own compilation based on chapter and 3.2.2. While the 1999 NAP started to strategically re-build the base for German socioeconomic policies, the 2000 NAP focused on cost control and financial reforms in order to provide for the solid base of future reforms and to enable Germany to further build up the edifice of German socio-economic policy reforms. The 2000 German NAP concentrated on the reforms of the tax and social security system, their effects on the labour market as well as on some structural reforms, such as the National Adaptation to the ‘Policy ID’ of the EES 375 ‘Labour Office 2000’ programme. A strong focus was also given to the development of the entrepreneurial sector. The continuation and extension of existing policies prevailed with some new initiatives focusing on training and qualification in the employability and the entrepreneurship pillar. Additionally, a huge focus was given to the implementation report on previous policy reforms and to a more positive reaction to the 2000 recommendations, than in the case of the UK. Länder level experiences were, yet, not exemplified as in-depth as in previous NAPs, giving the 2000 NAP a less pronounced multilevel quality. With this record, the 2000 NAP was to some extent imbalanced towards the entrepreneurship pillar, creating a slight asymmetric ?-convergence (similarity towards a common model) for that particular year. Waiting for the ‘Blueprint’ to be Designed in 2001: Evaluating Existing Approaches Instead of Launching New Activities The 2001 recommendations once more underlined the need to further strengthen the German active-preventive approach and early intervention activities to target unemployment and long-term unemployment. The East German Länder were to be particularly targeted with such activities (cf. Council of the EU 2001a:30). Disincentives for older workers to take up work, particularly connected to the national early retirement scheme, were again recommended to be removed in order to improve this group’s participation rate. The recommendations urged Germany to adopt further measures to fight skills gaps in order to increase employability with incentives for constant education and training to be reinforced. Additionally, the German lifelong learning approach was requested to be amended by concrete targets. As in 2000, the high tax burden on labour and the persistently high non-wage labour costs, representing the highest rate in Europe, gave cause for concern. Thus, taxes on labour as well as social security contributions should be further reduced especially in the case of low wages. Finally, the German horizontal approach, coupling gender mainstreaming and policy field related measures to improve equal opportunities, was recommended to be strengthened by measures to reduce the gender pay gap (cf. ibid.). As the 2000 NAP, the 2001 German NAP dedicated a special section to respond to the single recommendation. In view of the request to further advance the activepreventive approach, the German government referred to measures presented in earlier NAPs, especially the ‘Employment Promotion Reform Act’, including the integration pathway approach and the early intervention practice of the FES. Furthermore, it highlighted the increase in public funding of active labour market policies to 44.4 bn DM in 2001 (cf. Federal Republic of Germany 2000:69f. and 9). Additional action to improve particularly the situation of long-term unemployed was announced to be promoted by the December 2000 ‘Act on Improvement of Cooperation of Employment Offices and Authorities in Social Welfare’ (Gesetz zur Verbesserung der Zusammenarbeit von Arbeitsämtern und Trägern in der Sozial- National Adaptation to the ‘Policy ID’ of the EES 376 hilfe) (cf. ibid.:2001:70). The participation of older workers was justified to increase by the rise of retirement age from 60 to 65 years for men by 2001 and for women by 2004 as decided in 1996. Moreover, increased activities of the Alliance for Jobs were perceived to add to the positive development in this sector. Criticism on the skills gap within the German labour market was responded to be tackled by an enhanced focus of the Alliance for Jobs on this area and by the federal programme for ‘Lifelong Learning’ adopted in 2000 (cf. ibid.:71). The reduction of tax burden on labour was to be further instigated by the ‘Tax Reform 2000’ and the ecological tax reform. Further reduction was announced to be the result of the statutory pension insurance reform foreseen to be implemented in 2001 (cf. ibid.:72). Finally, the supranational assessment of German equal opportunities policies was countered by referring to the 1999 ‘Women and Work’ programme, the government’s dual approach to gender mainstreaming and streamlining of policy areas as well as the particular emphasis given to gender equality enshrined in the envisaged pensions reform, such as by the compensation of maternity leaves (cf. ibid.:72f.). On the background of economic recovery and positive growth rates both for employment and the overall economy, the 2001 German government priorities related to socio-economic policy-making focused on • further sustainable consolidation of the public finances, including de-regulation and the reduction of the state quota and tax levels; • further reduction of non-wage labour costs; • promotion of entrepreneurial activities in the field of new technologies and ICT; • targeted support for SME; • targeted support for disadvantaged groups–especially youth, older workers, long-term unemployed and persons at a disability; • extension of the JUMP programme until 2003; • reform of the pension system, including the promotion of private provision; • review of the ‘Employment Promotion Reform Act’, of the legal framework for part-time and temporary work or fixed-term contracts and of the ‘Works Constitution Act’; • further promotion of ICT use and training (cf. Deutscher Bundestag 2000a: 11212-11221, 2000b:11285-11341). In line with these 2001 priorities, the “overall economic, financial and labour policy strategy of the Federal Government .. [was] geared towards the central goal of creating new jobs” (Federal Republic of Germany 2001:3). The employment policy focus outlined in the 2001 German NAP reflected the overall government priorities for that particular year. It concentrated on the creation of an economic framework that allowed for economic activities to expand as “efficiently, employment-oriented, and ecologically sound as possible” (ibid.:4). In doing so, it focused on the support of especially disadvantaged groups, entrepreneurial activities and self-employment, the improvement of qualification measures, the increase of competition as well as the improvement of productivity and innovation (ibid.). Former government activities, National Adaptation to the ‘Policy ID’ of the EES 377 such as the ‘Future Programme 2000’, the ‘Tax Reform 2000’ and the reform of the statutory pension insurance system, were assessed to support these priorities. Continuing the domestic fight against youth unemployment, the JUMP programme was extended until 2003 and its focus increasingly laid on East Germany (cf. ibid.:16; Deutscher Bundestag 2000b:11286), with another 2 bn DM available for the FES in 2001 out of which 1 bn DM were exclusively earmarked for the new Länder. Amending JUMP, the so-called ‘Mobility Assistance’ was integrated into the programme in January 2001 in order to facilitate the take up of employment across Germany. Länder level activities, such as basic vocational school years, preparatory years, or full-time preparatory schooling complemented activities to increase youth employment (cf. Federal Republic of Germany 2001:17). In view of long-term unemployment, the 1999 ‘Programme for the Long-term Unemployed’ was prolonged until 2002 (cf. ibid.:18). A reform of the programme was announced for 2002 in order to extend the active-preventive approach, to modernise placement services and “to provide increased incentives for the unemployed to look for work or ways to improve their employability” (ibid.:21). In order to improve conditions for active ageing, the ‘Act on Part-time Working and Fixed-term Employment Contracts’ (Gesetz über Teilzeitarbeit und befristete Arbeitsverträge) was adopted and the ‘Act on Part-time Work for Older People’ was extended until the end of 2009. It now includes the expansion of the maximum promotion period to six years in order to improve employability (ibid.:23). Furthermore, in January 2001 the Alliance for Jobs initiated a change of policy paradigm towards older workers insofar, as the option of early retirement was to be increasingly replaced by further efforts and training activities to increase the overall employability of those aged over 50 years. Supporting these re-integration efforts, “the age threshold for integration subsidies for older workers has been reduced from 55 to 50 in a statutory provision the application of which is time-limited until 2006” (cf. ibid.:23f.). To further improve the domestic education and training systems, the ‘School- Business/World of Work’ programme was continued until 2004 to give pupils vocational orientation during school periods. The new ‘Culture of Learning and Development of Competence’ was set up to run until 2004 and to increase learning in the social context (cf. ibid.:28). The ‘Learning Regions – Promoting Networks’ (Lernende Regionen – Förderung von Netzwerken) initiative, set up for the period until 2004, promoted regional co-operation and networking to increase participation in lifelong learning activities (cf. ibid.:27). Additionally, the new programme ‘Development and Opportunities for Young People in Social Hotspots’ was foreseen to test instruments to integrate disadvantaged young people into work (cf. ibid.:29) and to improve the relations between all areas of education. Moreover, the education software ‘New Media in Education’ was initiated, ‘Local, Multifunction Learning Centres’ were set up and women became especially targeted by programmes such as the “competence centre for women in the information society and technology, IDEE-IT project, ‘Be.Ing – in future with women’ campaign for female engineers, [and] training of girls to become IT mentors ‘Girls@D21.IBM’” (ibid.:29). Finally, National Adaptation to the ‘Policy ID’ of the EES 378 the 1999 programme ‘Innovation and Jobs in the Information Society of the 21st Century’ was announced to be amended by the national ‘Get Connected, not left out – IT in Education’ action concept, providing for the stronger integration of new media in school and into future training curricula (cf. ibid.:31). As a response to the need to further develop job matching activities, the ‘Labour Office 2000’ was announced to be extended nation-wide to improve supply-demand co-ordination (cf. ibid.:34). Dedicated to the fight against discrimination within the labour market, the 2001 NAP highlighted the 2001 first ‘Report on Poverty and Prosperity’ as providing underlying information on the state of the German social system (cf. ibid.:35). Specific policies adopted to improve the situation included the ‘Act to Combat Unemployment of Severely Disabled People’ to strengthen equal opportunities and the integration of disabled persons into the labour market as well as the adoption of the ninth book of the Social Code (SGB IX) ‘Rehabilitation and Participation of Disabled People’ in 2001 to combat discrimination and to promote social inclusion and equal participation (cf. ibid.:36). Targeting at self-employment, business start-ups and entrepreneurial activities, the overall budget available for entrepreneurial activities was increased in order to support business start-ups by unemployed people. EXIST and the regional extension of EXIST-SEED were continued and new university chairs for entrepreneurship were announced to be established across the Republic in order to improve and spread knowledge on entrepreneurial activities in Germany (cf. ibid.:41). The 2001 NAP also underlined the need for a successful implementation of the programme ‘Internet for Everybody: 10 Steps towards the Information Society’ (Internet für alle: 10 Schritte auf dem Weg in die Informationsgesellschaft), the relevance of ICT training for the enhancement of overall skills levels, the planned “[r]eform of the regulation governing the examination for the grade of Master Craftsman and amendment of the Aufstiegsfortbildungsgesetz (Career Advancement Support Act)” (ibid.:43), the continuation of de-regulation and privatisation policies as well as similar Länder activities, the latter yet not being especially outlined. Continuing previous tax reform steps, further decreases in tax rates, enshrined in the ‘Tax Reform 2000’, included a reduction of the basic and highest income tax rate to 17 pp and 47 pp in 2003 and to 15 pp and 42 pp in 2005. Moreover, the basic taxfree allowance was decreased to 15,000 DM in 2005, the corporate tax reform was announced to be implemented in early 2001 with a 25 pp tax rate for distributed and retained profits, the ‘Ecological Tax Reform’ was continued and a test period for the effects of social security contributions’ subsidies and increased child allowances for low-paid employees in four Länder announced (cf. ibid.:49f.) In order to modernise work organisation and lifelong learning, social partners, as in the 2000 NAP, announced to make increased use of ‘job rotation’, to examine the review of working time arrangements and of the statutory protection against insolvency and to jointly increase training, qualification and lifelong learning programmes (cf. ibid.:53). Moreover, the new government initiative ‘Innovative Work – The Future of Work’ was set up. It aimed “to develop people's competence to act National Adaptation to the ‘Policy ID’ of the EES 379 and their employability, as well as to support undertakings' innovation and adaptability” (ibid.). Regarding the flexibilisation of the labour market, “[s]pecial efforts focus on the reorganisation of the law on health and safety at work for 2001” (ibid:55) and on the better co-ordination self-regulation arrangements and government activities. A new government pilot programme ‘Business Start-ups and Health and Safety at Work – Qualified Advice and Extensive Information’ aimed at integrating health and safety aspects into early business planning phases. Furthermore, the ‘Works Constitution Act’ (Betriebsverfassungsgesetz) was announced to be reformed, acknowledging “the change in the working world and of the concomitant role of the works councils and of intra-company co-determination” (ibid.). It should additionally improve the reconciliation of work and family life, gender equality and female representation in works councils (cf. ibid.:64). Generally, in view of gender mainstreaming, the domestic approach was announced to be transformed into “a cross-sectional task, equal opportunities checking” (ibid.:60) exercise to review also existing employment policies. This initiatives was outlined to be accompanied by several other activities, such as the entering into force of the ‘Equality Act’ for federal administration (Bundesgleichstellungsgesetz) in mid-2001 and the preparation of an similar law for the private sector (ibid.:61 and 64). To tackle the gender pay gap and the segregation of German labour market, the ‘Women in the Information Society and Technology’ competence centre, set up in April 2000, was described to unite qualification, training and equal opportunities activities at federal level (cf. ibid.:62f.). Furthermore, another competence centre was established in September 2000, targeting at ‘Women in Higher Education and in Research Institutes’. These competence centres were flanked by the programme ‘Equal Opportunities of Women in Research and University Teaching’ to increase the rate of female professors to about 25 pp by 2005 (cf. ibid.:64). As announced in the 2000 NAP, the reformed ‘Parental Time Act’ was enforced in early 2001, including new child allowance provisions and a new parental time to potentially be divided between the parents (cf. ibid.:66). Moreover, part-time work was to be especially promoted as an alternative to better reconcile work and family life for both parents. The 2001 JER acknowledged that “challenges are being addressed by a panoply of measures in the framework of an overall stability- and growth-oriented macroeconomic policy, wage moderations and longer-term sustainability of public finances” (Council of the EU/European Commission 2001:46). The preventive approach to increase employability was assessed to have been strengthened, but still to be in need for consolidation and increased coherence. Especially policies targeting to reduce long-term unemployment were assessed to not have shown sufficient effects so far. The implementation of lifelong learning activities was recommended to be further reinforced with more concrete action to be taken. Investment in human capital should be fostered, quantitative and qualitative targets were to be identified and a broader range of responsible actors to be involved at all state levels (cf. ibid.:46f.). While equal opportunity policies were perceived to be developed quite well, their concrete implementation and output was required to be improved. Although the tax reform was assessed to improve the overall economic environment National Adaptation to the ‘Policy ID’ of the EES 380 and the entrepreneurial climate, the JER bemoaned that job creation efforts needed to be further reinforced, especially in East Germany with more attention to be paid to the participation of older workers, ethnic minorities and migrants (cf. ibid.:47). Germany was, moreover, recommended to provide for more childcare facilities, to increase skills levels especially related to ICT knowledge, to further reduce the gender pay gap and to further adapt working times in order to enhance the reconciliation of family and work life. Social inclusion was recommended to be improved with special attention to be given to the situation in East Germany and the low-paid sector (cf. ibid.). Table 38: Main German Socio-economic and Employment Policies and Innovations introduced in 2001 Policy / Initiative Targeting at Thematically linked to the EES’s … pillar Classed under EG Act on Part-time Working and Fixed-term Employment Contracts Unemployed, Employees, Employers, Families Employability 3, 13, 15, 16 Learning Regions – Promoting Networks Regions, Employees, Employers Employability 4 Development and Opportunities for Young People in Social Hotspots Disadvantaged Youth Employability 4 New Media in Education Schools, Education & Training Institutes Employability 4 Culture of Learning and Development of Competence Employees, Employers, Employability, Adaptability 4, 15 Act to Combat Unemployment of Severely Disabled People Disabled Persons Employability 7 Social Code, 9th book, SGB IX Disabled Persons Employability 7 Internet for Everybody: 10 Steps towards the Information Society Labour force, Employees, Employers, Entrepreneurship 10 Innovative Work – The Future of Work (Unemployed) Employees, Employers Adaptability 13 Business Start-ups and Health and Safety at Work – Qualified Advice and Extensive Information Employees, Employers Adaptability 14 National Adaptation to the ‘Policy ID’ of the EES 381 Policy / Initiative Targeting at Thematically linked to the EES’s … pillar Classed under EG Works Constitutions Act Reforms Employees, Companies/ Business, Employers Adaptability 14 Equality Act Women Equal Opportunities 16 Women in Higher Education and in Research Institutes Women Equal Opportunities 17 Women in the Information Society and Technology Women Equal Opportunities 17 Equal Opportunities of Women in Research and University Teaching Women Equal Opportunities 17 Parental Time Act Families, Women Equal Opportunities 18 Source: Own compilation based on chapter and 3.2.2. While the 2000 NAP focused on cost control and financial reforms to consolidate budgetary framework for future reforms, the 2001 German NAP covered a period that still seemed to wait for the ideal blueprint for re-construction to emerge. The main focus of the 2001 German NAP, like in previous years, was laid on budget consolidation, tax reforms, the improvement of the economic environment, and the further re-construction of the knowledge society. With this focus, it quite closely mirrored the overall government priorities in the socio-economic field. Active labour market policies broadly remained limited to youth, long-term unemployed and other disadvantaged groups as well as geographically concentrated on East Germany in order to balance the divided labour market. Moreover, progress was achieved by the adoption of the legal frame for part-time work. The NAP was partially imbalanced towards reporting on the implementation of previous years’ policies and reforms as well as the frequent announcement of policy reviews with only few new policy approaches explicitly outlined. As in 2000, the 2001 NAP referred to the extension of existing federal level programmes and initiatives, but did not explicitly exemplify Länder approaches. This practice again deprived the German NAP of its specific multilevel character. The 2001 German NAP, yet, also levelled the previous year’s asymmetry of ?-convergence (similarity towards a common model) through a rather equal share of policies adopted under each pillar. National Adaptation to the ‘Policy ID’ of the EES 382 The Start of ‘Fast-Track Construction’ in 2002: Reform Boost after Years of ‘Dawdling over’ Substantial Modernisation The 2002 Council recommendations advised Germany to dedicate reinforced efforts to prevent high inflows in long-term unemployment and to substantially reduce existing high levels particularly in East Germany. Disadvantaged groups, targets that the overall German activation approach did not seem to have sufficiently covered so far, were underlined as specifically problematic (cf. Council of the EU 2002b:73). The recommendations, moreover and again, emphasised the persistent need to remove work disincentives for older workers that remained to derive from German early retirement practice. Regarding the modernisation of work organisation, Germany was recommended to engage stronger in the flexibilisation of work contracts and working hours as well as to tackle skills gaps. Related efforts should include the strengthening of incentives for constant training and qualification within an enhanced national lifelong learning strategy, comprising means for formal recognition and accreditation of learning. As in the previous years, the high level of tax burden on labour was subject of critique. The Council again requested Germany to reduce taxation on labour and social security contributions especially for low-paid jobs. Furthermore and again as in the years before, efforts to reduce the gender pay gap especially through targeted tax reforms and increased childcare provisions–adapted to domestic working hours and work organisation models–were recommended (cf. ibid.). The 2002 German NAP presented the government’s responses to the Council recommendations in the first part of the document, giving them a more prominent position than in previous NAP that placed them at the end. The 2002 NAP responded to the recommendation related to long-term unemployment and the enhancement of the activation approach in this labour market segment with the January 2002 adoption of the ‘Job-AQTIV Act’ (cf. below). The Act was outlined to be the main new instrument to accelerate job placement and to shorten unemployment periods. Key elements of the Act to increase activation measures were the targeted assessment of the unemployed's employability and her/his work experience profile, resulting in personalised placement strategies and the signature of binding re-integration agreements. Furthermore, waiting periods for the applicability of active labour market instruments to difficult to place persons were abolished, supporting the active early intervention idea of the EES (cf. ibid.:19). The 2001 ‘Act on Part-time Work and Fixed-term Employment Contracts’ was presented to be especially supportive to increase participation rates of older workers by offering more flexible work organisation arrangements. Moreover, the 2001 paradigm change of the Alliance for Jobs was assessed to be supporting government efforts such as the pension system reform, which was announced to be fully operational in late 2004 (cf. ibid.:20). The recommendation on the further flexibilisation of work organisation was responded to by pointing at 2002 initiatives, such as ‘A New Quality of Work’ (Neue Qualität der Arbeit), ‘Innovative Work’ (Innovative Arbeitsgestaltung) or the ‘Reform of the Regulations on the Grade of Master Craftsman’ (Reform der Meisterprüfungs- National Adaptation to the ‘Policy ID’ of the EES 383 ordnung) (cf. ibid.:21; cf. below). The criticism concerning high tax and social security contributions’ burdens on labour was replied to by reference to the 1999/2000/2002 tax reform steps and the past reform of the pension system. Yet, criticism on necessary reforms of the social security system was accepted. Reforms were announced to represent a focus of future attention (cf. ibid.:21f.). Finally, the recommendation to further reduce the gender pay gap and to increase childcare places was responded to by reference to the authority of collective bargaining partners in this area and by pointing at the government’s past initiatives, such as ‘Women and Work’, family-friendly tax reforms, increase in (Basic) Child Allowance or the federal financial support of Länder activities to increase childcare places (cf. ibid.:23f.). German socio-economic policy reforms for 2002, as outlined by the government during the traditional budget debate in September 2001, broadly focused on • further consolidation of domestic public finances especially in the light of the post 9/11 global economic crisis; • further financial support for structural reforms in East Germany, new technologies as well as research and development; • improvement of the quality of gainful employment and the consolidation of social security systems; • progress in the employment situation of disabled persons, including the envisaged ‘Act on Equal Opportunities of Disabled Persons’ (Gleichstellungsgesetz für behinderte Menschen); • stabilisation of the pension system through private provision and occupational pension schemes; • strengthening the activation approach and finalisation of the domestic labour market reform through the adoption of the ‘Job-AQTIV Act’ and the partial reorganisation of the FES’s job placement practice; • financial support of SME to allow for further qualification and training of personnel; • abolition of early intervention waiting periods for eligibility to active labour market instruments for difficult to place persons under certain conditions such as participation in job rotation; • improvement of female participation through better re-integration instruments; • adaptation of legal provisions concerning temporary work with an increase of maximum ‘lending periods’ to two years and the application of the company’s own payment provisions from month 13 of temporary work (cf. Deutscher Bundestag 2001a:18370-18374, 2001b:18506-18551). In line with these government priorities for 2002, a real employment policy reform boost was to be witnessed in 2002. It included the two most important employment policy initiatives ever since the launch of the EES: the ‘Job-AQTIV Act’ (Aktivieren, Qualifizieren, Trainieren, Investieren und Vermitteln–‘Activate, Qualify, Train, Invest and Place’) and the so-called ‘Hartz’ reforms, the much and controver- National Adaptation to the ‘Policy ID’ of the EES 384 sially discussed results of the Commission on ‘Modern Services on the Labour Market’ to modernise the FES and the German labour market. The 2002 NAP explicitly answered to the horizontal objectives introduced in the 2001 EGs. It, thereby, showed clear traces of embracing the ideas of the EES. Given the slight slowdown of economic growth in 2001, it took up the previous years’ focus on economic consolidation as a starting point for the improvement of employment performance and underlined the priority of domestic economic growth for promoting employment and fostering job creation. The reduction of public debt and the creation of a reasonable tax system were again outlined as central to this priority. Therefore, “[t]he economic strategy of the Federal Government consist[ed] in combining a macroeconomic anti-inflationary, pro-growth policy geared towards generating employment with microeconomic structural reforms of the social and ecological market economy” (Federal Republic of Germany 2002:5). Moreover, special emphasis was given to the improvement of equal opportunities by increasing support for women and older people to re-enter the labour market or to stay in work (cf. ibid.:11). Investing in job quality and the overall improvement of employees’ life quality in line with the EES’s ‘quality of jobs’ paradigm, together with reinforced efforts related to lifelong learning, training and the reduction of the skills gap were expected to increase the overall competitiveness of the country (cf. ibid.:10f.). Building the focal point of the 2002 employment policy reforms under the EES’s employability pillar, the ‘Job-AQTIV Act’–more than any previous German employment policy reform–touched upon several pillars of the EES and, as far as its contents is concerned, can be interpreted as an intense response to activation demands. As a sign of its proximity to the EES, the strategy is explicitly referred to in the preamble of the law. Apart from the 2002 ‘Hartz’ concept (cf. below), the act was the only example of such reference to the EES in German policies since its launch in 1997. The ‘Job-AQTIV Act’ replaced the 1998 ‘Employment Promotion Reform Act’ and entered into force in January 2002. With its broad focus on active prevention (cf. Berthold/Berchem 2003:32), it “specifies the goals for the overall orientation of labour market policy” (Thiel 2004:158). It concentrates on the prevention of youth and long-term unemployment, the increase in employment of older workers, training measures and lifelong learning activities. It offers supplementary instruments, such as binding agreements, job rotation for the re-integration of unemployed into the labour market and strengthening training measures for all employees. By doing so, it takes up the instruments of the ‘Employment Promotion Reform Act’ and the SGB III and bundles the German employment policy armoury into one single tool-box. Furthermore, the Act prescribes that activation measures have to be applied at latest when a person has reported unemployed (cf. ibid.:90). “This represents an important shift in the government’s employment strategy towards a policy of Fördern und Fordern – actively encouraging and motivating people to look for work” (cf. ibid.:7). Additional tools were provided for the promotion of a strong job creating infrastructure and further training and qualification activities (cf. ibid.:8). To fight youth unemployment and prevent long-term unemployment, the ‘Job- AQTIV Act’ “ensures the complete implementation of the first employment policy National Adaptation to the ‘Policy ID’ of the EES 385 guideline. Profiling and inclusion agreements, including early reviews and their continuation, and – if necessary – the early application of labour market policy instruments have now become characteristic features of Germany’s inclusion pathway” (ibid.:27). This pathway builds on reviews of the integration agreements of young people already after three months of unemployment (cf. ibid. 29) and is accompanied by an increase in the FES’s placement personnel in 2002 as well as the further out-sourcing of job placement activities to external companies (cf. ibid.:28). The ‘Job-AQTIV Act’ especially targets at the reduction of long-term unemployment by intensifying and systemising previous instruments and by more intensive co-operation of the FES and the welfare authorities through ‘Joint Contact Centres’ (cf. ibid.:30). Moreover, the ‘Immediate Programme for the Reduction of Youth Unemployment’ (JUMP) was further extended until 2003 with another 1.02 bn € available, half of which earmarked for East Germany. Activities in this sector were amended by the federal action programme ‘Reducing Youth Unemployment’ (Abbau der Jugendarbeitslosigkeit) (cf. ibid.:9). The ‘Job-AQTIV Act’ was also outlined to have “improved the cross-border employment promotion within the EU in the areas of vocational training and continuing training and … mobility promotion to increase workers employability and professional reinclusion” (ibid.:32). Moreover, to develop active ageing policies, the federal research and development programme ‘Innovative Work’ was presented to introduce “concepts for in-company qualification and personnel development with mixed-aged personnel” (ibid.:33). Related to the further development of the German education and training system, the 2002 German NAP referred to the federal programme ‘Vocational Skill-building for Young People with a Special Need for Promotion’, which was–supplemented by specific Länder activities–continued with a federal budget of about € 55 m until 2005 (cf. ibid.:36). In order to enhance job matching, the 2002 NAP presented the preparation of the ‘Act on Immigration’ to bring relieve in view of placement bottlenecks especially related to the ICT sector. It planned “to replace the existing recruitment stop for foreign workers with a multi-layered set of instruments in order to react to the new situation in an appropriate way” (cf. ibid.:39). Moreover, to generally improve the situation of immigrants and foreign workers, the Alliance for Jobs launched the joint action programme ‘Improving Training Opportunities for Migrants’ (Verbesserung der Bildungssituation von Migrantinnnen und Migranten), providing further advice and consultation (cf. ibid.:11). In order to generally combat discrimination and promote social inclusion, the ‘Job-AQTIV Act’ was presented to provide for wage subsidies to employers to enable employees to combine ongoing employment and vocational training (cf. ibid.:42), especially supporting job rotation. Most prominent among new activities to reduce administrative burdens for business start-ups was the launch of “an Internet-based information system … at the beginning of 2002 to provide potential start-ups with information on the regulations, administrative procedures, jurisdiction and legal framework pertaining to the proposed business activity” (ibid.:46). Moreover, previous tax reform steps were announced to be enhanced by the ‘Act to Refine Corporate Tax Law’ (Gesetz zur National Adaptation to the ‘Policy ID’ of the EES 386 Fortentwicklung des Unternehmenssteuerrechts) to further relieve tax burdens on SMEs and to support entrepreneurial activities. “Similarly, introduction of the Startgeld-Programm (Seed Capital Programme), which provides business start-ups with up to € 50,000 to cover their initial capital needs, has proved particularly successful” (ibid.:46). Several campaigns and funds additionally supported new activities in the area, such as the ‘nexxt’ campaign related to business take-overs, the improvement and widened eligibility of grants under the ‘Federal Law on Grants for Education and Vocational Training’ (BAföG) and the ‘Federal Grants for Occupational Training as a Master Craftsman’ (Meister-BAföG), as well as the announcement of the new action programme ‘Power to Women Entrepreneurs’ (Power für Gründerinnen) (cf. ibid.:47ff.). Supporting job creation, the 2002 NAP pointed at the creation and certification of 11 new and modernised professions in the service sector to demonstrate domestic progress (cf. ibid.:50). Moreover, the programme ‘IT Research 2006’ (IT-Forschung 2006) outlines major areas for future engagement from 2002 to 2006, while a new ‘Innovative Regional Centre of Growth’ (Innovative regionale Wachstumskerne) programme provides for a framework for regional development focused on innovation (cf. ibid.:51). Additionally, the “new promotional measure Netzwerkmanagement-Ost (NEMO) (Network Management East) will establish regional networks of research establishments in the new Länder” (ibid.:51f.). In order to strengthen especially regional and local action for employment, the 2002 NAP paid tribute to the regional dimension of the EES by introducing the programme ‘Promotion of Job- Creating Infrastructure’ (Beschäftigung schaffende Infrastrukturförderung), which– together with the ‘Job-AQTIV Act’–should ensure regional infrastructural policies to be taken more closely into account in the context of structural and employment policy planning (cf. ibid.:54). Modernising work organisation and lifelong learning programmes, the new initiative ‘A New Quality of Work’ (Neue Qualität der Arbeit) showed features of response to the 2001 Council recommendation on balancing social security and flexibility. It was foreseen to ensure the balance between the two elements, involving the whole range of domestic actors relevant to improve the national employment situation (ibid.:11f. and 62). Presented to increase adaptability in enterprises as a component of lifelong learning, the programme ‘An Enhanced Culture of Learning’ (Lernkultur Kompetenzentwicklung) was introduced to concentrate on improving inhouse training for up-skilling companies’ workforce (cf. ibid.:64). Moreover, the ‘Job-AQTIV Act’ enhanced training support for older workers, while the ‘EXIST’ programme as well as ongoing ICT training initiatives were announced to be continued over 2002 (cf. ibid.:65f.). Responding to the supranational gender mainstreaming approach, the 2002 German NAP characterised gender equality as the universal principle of the ‘Job- AQTIV Act’ (cf. ibid.:66). Moreover, the ‘Centre of Excellence for Equal Opportunities in the Work and Service Society of the 21st Century (2000 – 2003)’ (Kompetenzzentrum für Chancengleichheit in der Arbeits- und Dienstleistungsgesellschaft des 21. Jahrhunderts (2000 – 2003)) was established to provide assistance for the National Adaptation to the ‘Policy ID’ of the EES 387 adoption of the national gender-mainstreaming approach at subnational state, company and organisational levels (cf. ibid.:69). In order to tackle the gender pay gap and the segregation of the labour market, the ‘Job-AQTIV Act’ included a flexible instrument to increase the share of women participating in active labour market policies as long as female unemployment exceeded male unemployment levels (cf. ibid.:75). Moreover, several new campaigns to increase female participation were launched in 2002, such as the ‘Women Physicists Campaign’ (Physikerinnen- Kampagne) and existing ones, such as the ‘Equal Opportunities of Women in Research and University Teaching’ initiative were extended until 2003 (cf. ibid.:75f.). To support the better reconciliation of work and family life, the 2002 German NAP listed the government information campaign ‘More Flexibility for Fathers’ (Mehr Spielraum für Väter), the July 2001 social partners’ ‘Agreement to Promote Equal Opportunities in the Private Sector’ (Vereinbarung zur Förderung der Chancengleichheit von Frauen und Männern in der Privatwirtschaft) as well as January 2002 ‚Act to Supplement the Scope of Home Care for Persons in Need of Care’ (Gesetz zur Ergänzung der Leistungen bei häuslicher Pflege von Pflegebedürftigen), generally improving home care conditions of mentally disabled and ill persons (cf. ibid.:77ff.). The second most important employment policy reform of the social democratsgreen coalition government–that can be regarded as the core reform concept of the post-EES period and the most radical as well as criticised reform of the German social security system ever since the establishment of the Federal Republic (cf. Hennecke 2004:548)–was initiated in March 2002 by the Commission ‘Modern Services in the Labour Market’ (Moderne Dienstleistungen am Arbeitsmarkt) chaired by Peter Hartz (the so-called ‘Hartz Commission’). It focused on the reform of German employment policies and the FES after the latter had come to the focus of the public attention in February 2002 through a Federal Court of Audit report on wrong placement figures and considerable inner-organisational mismanagement (cf. Hennecke 2004:556; Raddatz/Schick 2003:7; Streeck 2003:8; Thiel 2004:159). The ‘Hartz’ Commission presented its report on 16 August 2002, proposing 13 innovation modules to combat unemployment and to support the reform of the FES: • family-friendly job placement, especially targeting at families and lone parents (‘Quick placement system’); • new criteria for reasonableness and preparedness to accept job offers; • JobCentres bringing together all relevant actors for job placement; • focus on young unemployed; • Personnel Service Agencies as business units, ‘neutralisation’ of the protection against wrongful dismissal, support for in-house training and the integration of persons most difficult to place; • service for customers and employers as well as increase of job placements activities; • merger of unemployment assistance and social benefit; National Adaptation to the ‘Policy ID’ of the EES 388 • restructuring of Länder employment services into competence centres for new jobs and employment development, market research and support for regional development; • development of new employment opportunities and decrease of moonlighting by the introduction of ‘I Inc.’ (Ich-AG) and ‘Family Inc.’ (Familien-AG); • job balance ‘Discount systems’ for employees; • ‘Bridge system’ for older people; • transparent controlling and efficient ICT-support of all processes; • contribution of ‘Professionals of the Nation’ and master plan project coalitions following the Alliance for Jobs (Schmitthenner 2002:Annex 1; cf. Bundesregierung 2002; Commission for the decrease in unemployment and the restructuring of the FES 2002). The concept–led by the activation paradigm to ‘inspire self-help to deliver security’ (cf. Commission for the decrease in unemployment and the re-structuring of the FES 2002:19) in line with the government’s Fördern und Fordern idea (cf. ibid.:45) and the supranational EGs (cf. ibid.:20 and 56)–is based on the synergy of employment and economic policy approaches. It is focused on the main aims to reduce the number of unemployed people from nearly 4 million to about 2 million persons until 2005, to diminish the period of job placement from 33 weeks to 22 weeks, and to decrease spending on earnings-related benefit and unemployment benefit from 40 to 13 thousand millions (cf. ibid.:5; Bensel 2003:17; Schmitthenner 2002:1). The instruments to achieve these aims are stronger incentives for quick job placement, targeted support for self-help, and stronger use of temporary employment (Commission for the decrease in unemployment and the re-structuring of the FES 2002:12ff.). Concerning temporary work, so-called ‘Personnel Service Agencies’ (Personal- ServiceAgenturen) were attached to each of the 181 German JobCentres92 (cf. ibid.:29, 31, 67ff. and 147ff., 182; cf. Bensel 2003:22ff.) in order to lend unemployed people to companies for a restricted period. Until the end of 2002, 50 of them were announced to be established. Unemployed not willing to accept temporary work offers suffer cutbacks in unemployment benefit after a period of 6 months of unemployment (cf. Commission for the decrease in unemployment and the restructuring of the FES 2002:147ff.). By increasing the share of temporary employment, unemployment was intended to decrease by 780,000 (cf. Schmitthenner 2002:2). With a view to job placement, the ‘Hartz’ concept introduced the need to announce unemployment as soon as a person is under notice to become unemployed (cf. Commission for the decrease in unemployment and the re-structuring of the FES 2002:23 and 81ff.). Missing to announce foreseeable unemployment entails cuts in unemployment benefit. Moreover, companies that avoid dismissals were proposed to get discounts for their contributions to the unemployment insurance. With the 92 Comparable to the British Jobcentre plus, including the merger of the employment services and social security offices, youth welfare departments, housing offices with addiction and debtor counsellors (cf. ibid.:22). National Adaptation to the ‘Policy ID’ of the EES 389 ‘Hartz’ concept the principle of reasonableness and preparedness to accept job offers was tightened. Unemployed now have to demonstrate a job being unreasonable for them and not vice versa, as before the ‘Hartz’ reforms (cf.ibid.:24 and 93ff.; cf. Bensel 2003:22f.). Moreover, young persons and especially singles are obliged to show greater flexibility and mobility in job search as well as to accept lower wages and removal to other parts of Germany to take up work (cf. Commission for the decrease in unemployment and the re-structuring of the FES 2002: 24 and 93ff.). With the ‘Hartz’ reforms, unemployment and social benefit were merged and paid in two different rates. With the enforcement of the provisions of the 2003 SGB II, the so-called ‘Hartz IV Act’, the merger became operational on 1 January 2005 (cf. Hennecke 2002:548f.). As the previous unemployment benefit, the first of the two rates is paid during the first 12 months of unemployment. It is based on the income during the period of employment. This period of ‘Unemployment Benefit I’ (Arbeitslosengeld I, ALG I) can be extended to 32 months in certain cases. After this first period, the newly defined welfare benefit, ‘Unemployment benefit II’ (Arbeitslosengeld II, ALG II), will be paid. It amounts less than the previous unemployment assistance (Arbeitslosenhilfe), but more than the previous social benefit (Sozialhilfe). ALG II is not temporary limited and financed by taxes (cf. ibid.:27, 125ff. and 128). As to the reform of the low wage sector, the previous € 325 ‘Mini Jobs’ were restructured. Employees earning up to € 500 were proposed to be entitled to receive state subsidies to their 10 pp flat rate contributions to health and pensions insurances (cf. ibid.:30). This € 500 limit was later on reduced to € 400 and amended by a sliding tariff of € 400 to € 800 for so-called ‘Midi-Jobs’ to further structure the low paid sector (cf. Berthold/Berchem 2003:33). In the course of these reforms, social security contributions were decreased to 10 pp and start to be compulsory with an income of € 200. From 2002 onwards, only one ‘Mini Jobs’ is allowed per person. Self-employment became less bureaucratic and easier to achieve for unemployed people aiming to make moonlighting more unattractive with the new instruments of the ‘I Inc.’ (Ich-AG)–a first step towards self-employment–and the ‘Family Inc.’– extension of the ‘I Inc.’ to family members (Familien-AG) (cf. Commission for the decrease in unemployment and the re-structuring of the FES 2002: 30 and 163ff.; Bensel 2003:24; Berthold/Berchem 2003:36ff.). In case of applicability, the business idea is publicly co-financed for three years. If profits do not exceed € 25.000 per year, they can be pocketed together with the state subsidy for unemployment and the tax flat rate of 10 pp. By these means, the unemployment level was intended to decrease by 500,000 (cf. Commission for the decrease in unemployment and the restructuring of the FES 2002:30 and 163ff.; Schmitthenner 2002:29). Moreover, the ‘Hartz’ reforms proposed to enable older persons to be removed from job placement on their own request through the so-called ‘Bridge system’. Instead of unemployment benefit, older workers were foreseen to receive a payment which takes into account their social security contributions. With this instrument, early retirement was assessed to become more unattractive (cf. ibid.:26 and 117ff.). On 21 August 2002 the government decided the ‘1:1’ implementation of the ‘Hartz’ concept (cf. Hennecke 2004:560; Raddatz/Schick 2003:9). Yet, due to National Adaptation to the ‘Policy ID’ of the EES 390 opposition of the Bundesrat, the ‘Quick placement system’, the ‘Bridge system’, the job balance ‘Discount system’ for companies and provisions related to so-called ‘training securities’ for young persons were not adopted (cf. Raddatz/Schick 2003:14). The 2002 JER repeated the critique of earlier years concerning German labour market weaknesses and regional divide, with a considerable level of long-term unemployment and unemployment of older workers unceasingly nurturing cause for concern. It urged Germany to enhance efforts to increase participation of these particularly weak target groups as well as overall job creation. Although recognising the potential impact of the new ‘Job-AQTIV Act’ and the reform proposals for the FES as elaborated by the ‘Hartz Commission’, activities under the employability pillar were still assessed to be in need for further strengthening. Moreover, structural reforms–particularly in East Germany–were assessed to need stronger promotion through a coherent and comprehensive approach for this region. Improvements concerning lifelong learning policies were recognised, but their effective implementation was called for. The demand for stronger inclusion of low-skilled workers, SMEs, qualitative as well as quantitative targets, accreditation, and formal recognition of learning activities was repeated in this context. In view of the abolition of the Alliance of Jobs in 2002, Germany was asked to re-start talks within this framework in order to push forward reforms and to respond to the EES’s social partnership paradigm. Further efforts were perceived to still be necessary regarding the assessment of measures adopted to reduce taxation on labour and non-wage labour costs as well as related to the reduction of the gender pay gap and the increase of full-day childcare facilities (cf. Council of the EU/European Commission 2003:66). Table 39: Main German Socio-economic and Employment Policies and Innovations introduced in 2002 Policy / Initiative Targeting at Thematically linked to the EES’s …pillar Classed under EG Job-AQTIV Act Unemployed, Employers Employability 1, 2, 3, 6, 7, 9, 11, 15 ‘Hartz’ reforms Unemployed, Employers, Selfemployment, FES Employability Overarching Reducing Youth Unemployment Youth Employability 1 Innovative Work Employees Employability 3 Act to Refine Corporate Tax Law Employers, Selfemployed Entrepreneurship 9 Seed Capital Programme Employers, Selfemployment Entrepreneurship 9 National Adaptation to the ‘Policy ID’ of the EES 391 Policy / Initiative Targeting at Thematically linked to the EES’s …pillar Classed under EG ‘nexxt’ campaign Employers, Selfemployment Entrepreneurship 9 Power to Women Entrepreneurs Women, Employers, Female Selfemployment Entrepreneurship 9 IT Research 2006 Employers, Selfemployment Entrepreneurship 10 Innovative Regional Centre of Growth Employers, Selfemployment, Regional Development Entrepreneurship 10 Network Management East Employers, Selfemployment, Regional Development Entrepreneurship 10 Promotion of Job-Creating Infrastructure Regional Development Entrepreneurship 11 A New Quality of Work Employers, Employees Adaptability 14 An Enhanced Culture of Learning Employers, Employees Adaptability 15 Centre of Excellence for Equal Opportunities in the Work and Service Society of the 21st Century (2000 – 2003) Women Equal Opportunities 16 Women Physicists Campaign Women Equal Opportunities 17 More Flexibility for Fathers Men, (Family) Fathers Equal Opportunities 18 Act to Supplement the Scope of Home Care for Persons in Need of Care Families, Care-Takers Equal Opportunities 18 Source: Own compilation based on chapter and 3.2.2. While the 2001 German NAP was still looking for the ideal recipe to re-construct domestic employment and labour market policies and approaches, the 2002 NAP reported on the start of the fast-track constructions. The ‘Job-AQTIV Act’ boosted the adaptation of national paradigms as, even more so, did the ‘Hartz’ reforms (due to adoption later in 2002, they were yet not part of the 2002 NAP). These two masterpieces–both explicitly referring to the EES and the EGs, even if the ‘Hartz’ report referenced the EES at a less prominent position than the ‘Job-AQTIV Act– National Adaptation to the ‘Policy ID’ of the EES 392 concentrated on the EES’s employability and entrepreneurship pillars. Yet, activities to increase female participation were not neglected either. With these reforms, the year 2002 can be regarded as the start of a real change of paradigm in German employment policies, aligning the former more with the overall ‘policy ID’ of the EES than the initiatives of the four previous years. The change of paradigm was, yet, not merely instigated by the EES itself or the European level. It was also the result of national intervening variables, such as the scandal related to wrong placement figures and statistics of the FES. Additionally, within the process of legal transposition of the ‘Hartz’ reform concept, the impact of domestic veto points (cf. chapter became obvious in the role of the Bundesrat. As a consequence, the ?-convergence (similarity towards a common model) of previous years again increased in 2002 and was rather symmetrical. This approximation of German employment policies to the overall ‘policy ID’ of the EES was, yet, partially spoiled by the abolition of the Alliance for Jobs in 2002, contradicting the EES’s social partnership paradigm. Finally, apart from the presentation of the changes assessed to be instigated by the ‘Job-AQTIV Act’, the 2002 German NAP, as did its predecessors, strongly focused on the implementation report of previous years’ initiatives. The stronger focus on Länder level initiatives with separate parts on the Länder annexed to the NAP was, yet, new to the German NAP practice. 5.2.2 ‘Speeding up the Construction Process’: Post Reform Boost Trends under the Streamlined EES (2003-2005) – Europeanisation Impact Intensified or Blurred? The 2003 and 2004 recommendations highlighted persistent negative variables, such as insufficient childcare facilities and disparities in pay between the genders to still hamper further improvement of equal opportunities (cf. Council of the EU 2003e:24). The employment rate of older people was criticised to still stay even below the 1997 German reference figure and to lag far behind most of other EU member states (cf. ibid., 2004b:50). Given the alarming economic forecasts, the recommendations called Germany to strongly concentrate on the further improvement and implementation of an active-preventive employment policy approach, especially focusing on the enhancement of labour market performance in East Germany (cf. ibid. 2003e:24). Moreover, unfavourable tax provisions and high nonwage labour costs were assessed to still create constant disincentives to take up work, with a considerable degree of labour market regulations–inter alia the German wage formation system, i.e. compulsory branch wage agreements (Flächentarifvertrag) and the Günstigkeitsprinzip–inhibiting further job creation (cf. ibid.). The 2003 recommendations urged Germany to further improve the efficiency of job placement assistance and active labour market initiatives and to focus on the enhancement of employment performance in East Germany to combat the national labour market division. They also asked the government to systematically reconsider and eliminate regulatory barriers to foster job creation, to improve more flexible work organisation

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Mit ihren spezifischen Merkmalen als neues Politikinstrument – wie etwa ihrem rechtlich nicht bindenden Charakter, dem Ziel des gegenseitigen Politiklernens durch Austausch bester Praktiken oder gemeinsamen Evaluierungsprozessen – stellt die Europäische Beschäftigungsstrategie (EBS) und die mit ihr Anwendung findende Offene Methode der Koordinierung (OMK) beschäftigungspolitische Akteure in der EU vor die neuen Herausforderungen von Politik-Koordinierung, die die Politikgestaltung im europäischen Mehrebenensystem neu prägen.

Das vorliegende Buch beschäftigt sich intensiv mit diesen unterschiedlichen Facetten der EBS und ihrer Wirkung. Es geht dabei über bisherige Einzelstudien zur EBS hinaus und befasst sich nicht nur mit deren Entstehung, Entwicklung und Merkmalen. Es kontrastiert vielmehr den eigenen Anspruch der EBS mit ihrer politischen Realität und untersucht theoretisch hoch reflektiert deren Einfluss auf Politik-Koordinierungsstrukturen, Beschäftigungspolitiken und zugrunde liegenden Ideen sowie deren Zusammenspiel mit anderen wirtschaftspolitischen Bereichen. Neben der EU-Ebene dienen Großbritannien und Deutschland als Fallbeispiele für mitgliedstaatliche Anpassungsprozesse. Das Buch verankert seine Wirkungsanalyse sehr fundiert in der wissenschaftstheoretischen Debatte um Europäisierung und Politikkonvergenz, um deren Anwendbarkeit im Falle der EBS kritisch zu analysieren. Es komplettiert damit Europäisierungsstudien zu regulativer Politik durch die Analyse des Einflusses weicher Politik-Koordinierung im europäischen Mehrebenensystem.