The article “Odd Couple” issued in the Economist talks about the German government and the Grand Coalition’s progress toward unemployment rates in Germany. The Grand Coalition is a joined government of the SPD (Social Democratic Party) and the CDU (Christian Democratic Union) which is seen to be odd couples as both parties have different traditional and political backgrounds. The SPD pursues socially acceptable policies; the CDU is a conservative party.
Both parties try to find ways to boost Germany’s labor market by reducing unemployment rates. The SPD calls for economy-wide minimum wages of € 7.50 ($...) to make work profitable for workers again and to shrink unemployment and the costs associated with it. Additionally the SPD wants to extend the payment period of unemployment compensation from 12 to 15 months for jobless people over 45 years and to 24 months for those over 50 years. However, extended welfare needs to be financed resulting in less money for investments and tax cuts. Angela Merkel opposes this extension as visible statistics have shown that the shortening of the payment period considerable decreased unemployment rates. She also opposes economy-wide minimum wages as these potentially destroy jobs. Since the Coalition needs to find some common ground there are still opportunities to reach a consensus on other matters, such as cutting pay-roll taxes to stimulate employment and to be more competitive or reforming the inheritance tax.
I have chosen this article about German unemployment issues to offer a different perspective on this explosive subject. At first glance, it is not that simple to compare the situation of the laid off Flint autoworkers with Germany’s unemployment problem as we have different organizations playing a part in this problem. I do, however, see some similarities. One for instance, is the closure or outsourcing of rather prosperous domestic corporations and plants to countries with low wages and labor costs leaving their employees in despair. Yet, there is a significant difference in terms of government support in both countries. Germans being laid off receive higher government welfare – unemployment benefits than US workers and the payment period of 12 to 24 months is longer in addition to keeping health insurance and retirement benefits paid by the state. American workers don’t receive that kind of government assistance in order to bridge the gap between unemployment and a new job.
On the other hand, in the US it seems much easier for people of all ages to find new jobs. Here, even people beyond their 50s find a job whereas in Germany, once you hit a certain age, particularly if you are between 40 and 50 years it is almost impossible to find a well-paying job in any field. Employers either regard you as overqualified and too expensive or simply too old.
In conclusion, it is hard to say which employees have it better – Germans or US employees, but I believe that both governments should encourage domestic corporations and offer incentives to keep the jobs in our countries.
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3 comments:
Excellent post, Susanne. You found an article that really provides another interesting perspective on this issue. Where do you think Michael Moore would stand on some of the policies and benefits offered to unemployed Germans? How come offering unemployed Germans longer and more benefits doesn't cure the problem? Is it that they aren't motivated? How does this relate to the Flint issue? If they didn't have government support to the extent that Germans do, what else might have prohibited many of them from finding a way to get new jobs and to improve the local economy? Just some questions that your blog prompted in me. Thought I'd pass them along to you.
I think Michael Moore's standpoint on this would be rather positive.These welfare policies and benefits would have helped the Flint autoworkers a great deal in getting back on their feet after being laid off from the GM plant. However,I believe that the compensation benefits would have helped them in the long run since Flints existence entirely depended on the car manufacturer. Eventually, the people would have been forced to leave Flint to find new jobs, since the state or the county Flint belonged to did not offer any incentives for companies to open up new factories in Flint,MI.
It is interesting that you mention the whole motivation issue with regards to Germany's unemployment benefits. And you hit a key factor;in some cases these "great" benefits are more of a burden than a blessing. For some people it is more profitable to remain unemployed instead of trying to find a job as you make more in unemployment than carrying a job!!!!!This consequently does not motivate people to get up and find themselves a job at all....especially the younger unemployed!!
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