Germany | The roots of the German miracle – apprenticeship – is not the only factor

In a provocative paper, Hermann Gartner[i] and Christian Merkl[ii] attribute the so-called German miracle to its “wage moderation” that was the result of labour-market policies in the years preceding the global crisis – a point that is often ignored in the public debate. It could well be that apprenticeship is not the only factor.

“While the US labour market has seen a dramatic loss in jobs in the Great Recession, the German labour market has seemed to be unaffected – the number of employed workers has remained stable. This is all the more surprising as German GDP dropped more than in the US in 2009 (-4.7% vs. -2.7%).”

“Without the wage moderation before the Great Recession, the German miracle would have been impossible. This is a point that is often ignored in the German public debate. The German Hartz reforms, which made the unemployment benefit system less generous, were certainly one of the reasons for the wage moderation. The reform was initiated in 2002 by a governing coalition, led by chancellor Schröder and the ruling Social Democrats. For some reason the Social Democrats are currently ashamed of this reform. If only they were to look at the facts from the Great Recession, they would surely be proud.”

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