Employment in Germany 2008

This guide will provide you with the essential briefing if you already have
operations abroad, are considering setting them up, or simply need to understand the
HR environment in this economy.

The German economy has emerged from several years of economic doldrums into a phase of export-led, growth – aided by sustained falls in unit labour costs and stagnating real wages. The system of industry-level bargaining, which still dominates pay setting in manufacturing, has delivered both generally moderate settlements, and the introduction of options to allow firms to depart from industry standards, subject to negotiation and consultation with employee representatives and trade unions.

One outcome of the upturn has been a marked drop in unemployment, with skill shortages emerging in a number of specialisms and regions. This has also prompted efforts to boost the employment of women and older workers. At the same time, there are concerns about regulating the lower end of the wage spectrum, as weakening collective bargaining and the impact of low-wage countries on its doorstep have led to a rise in inequality.

Major recent legislative initiatives have included:

• New provisions on parental and paternity leave, in force from 2007, with encouragement to fathers to take leave by granting an additional two months of parental benefit if both parents participate.

• Measures to promote the employment of people aged over 50, in force from May 2007, including employment subsidies to employers.

• Raising of the normal retirement age from 65 to 67 in stages, beginning in 2012.

• Agreement by the coalition in June 2007 of measures to regulate low pay.

As well as context and detail on rules on hiring, dismissal, employment contracts, and employee relations, the IDS International Employment Guide to Germany 2008 reviews bargaining trends, and highlights topical developments in law and practice, backed up a statistics on pay, earnings, and labour costs.

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