Earlier this week we noted the new and serious discussions in Germany about reforming “The German Model,” the labor-management relationship that gives unions an equal say in corporate board of director decisions (the so-called Mitbestimmung).
Recent union scandals and 10 percent unemployment (ah, good news, just dropped to 9.1 percent) have led the Germans to become more serious about putting the model to rest, an issue they’ve admittedly been debating for a long time…for good reason. As Reginald Dale observed in this International Herald Tribune column in 1996:
It should by now be painfully obvious that Germany’s cushy, consensus-based welfare state is ill-suited to meeting the challenges of the global economy.
The country’s rigid, high-cost labor market is crushing job creation and entrepreneurial flair, and the fabled social consensus that was once the envy of other industrial countries has become an obstacle to change.
OK, it’s hung on longer than expected, but what was true then is even more true, now. Here’s the latest evidence that should finish off the model.
Figures released by Germany’s Federal Statistics Office showed that the number of Germans emigrating rose to 155,290 last year – the highest number since the country’s reunification in 1990 – which equalled levels last experienced in the 1940s during the chaotic aftermath of the Second World War…[snip]
Leading economists and employers say the trend is alarming. They note that many among Germany’s new breed of home-grown “guest workers” are highly-educated management consultants, doctors, dentists, scientists and lawyers.
OECD figures show that Germany is near the top of a league of industrial nations experiencing a brain drain which for the first time since the 1950s now exceeds the number of immigrants.
These are serious demographic developments for Germany and Europe, but we’ll skip the Spenglerian/Steynian warnings and make just two observations:
P.S. And 9.1 percent unemployment. Rigid labor markets (and high taxes and absurdly generous social welfare programs and the decline of the work ethic) produce 9.1 percent unemployment.
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