Editing German model

{{for|German models|Category:German models}}
{{Refimprove|date=October 2009}}
[[Image:VW Wolfsburg.JPG|thumb|300px|The [[Volkswagen]] factory in Wolfsburg]]
The term '''German model''' is most often used in [[economics]] to describe post-[[World War II]] [[West Germany]]'s means of using (according to [[University College London]] Professor [[Wendy Carlin]]) innovative industrial relations, vocational training, and closer relationships between the financial and industrial sectors to cultivate economic prosperity.<ref>{{cite book |last1=Carlin |first1=Wendy |year=1996 |chapter=West German growth and institutions, 1945-90 |chapter-url=https://books.google.com/books?id=wiTtnUn5qGsC&pg=PA455 |editor1-last=Crafts |editor1-first=Nicholas |editor1-link=Nicholas Crafts |editor2-last=Toniolo |editor2-first=Gianni  |title=Economic Growth in Europe Since 1945 |publisher=Cambridge University Press |page=484 |isbn=9780521499644 }}</ref> The two key components of the German model is a national system for certifying industrial and artisan skills, as well as full union participation in the oversight of plant-based vocation training.<ref>{{Cite book |last=Thelen |first=Kathleen |url=https://books.google.com/books?id=I0afDJGPczwC |title=How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States, and Japan |date=2004 |publisher=Cambridge University Press |isbn=978-0-521-54674-4 |pages=63 |language=en}}</ref>

The German model of collective bargaining differs from the model common in other European countries and the United States.<ref name=":02">{{Cite journal |last=Jäger |first=Simon |last2=Noy |first2=Shakked |last3=Schoefer |first3=Benjamin |date=2022 |title=The German Model of Industrial Relations: Balancing Flexibility and Collective Action |url=https://www.aeaweb.org/articles?id=10.1257/jep.36.4.53 |journal=Journal of Economic Perspectives |language=en |volume=36 |issue=4 |pages=53–80 |doi=10.1257/jep.36.4.53 |issn=0895-3309|doi-access=free |hdl=10419/265721 |hdl-access=free }}</ref> In Germany, unions and employer associations bargain at the industry-region level.<ref name=":02" /> In contrast to tripartite corporatist systems, the German government is not involved in the negotiations.<ref name=":02" /> These large-scale agreements have broad coverage and lead to considerable standardization in wages and employment conditions across the country.<ref name=":02" /> Some bargaining occurs at the firm level.<ref name=":02" />

== History ==
In 1869, legislation liberalized apprenticeship training, removing restrictions on who could take on apprentices.<ref name=":0">{{Cite book |last=Thelen |first=Kathleen |url=https://books.google.com/books?id=I0afDJGPczwC |title=How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States, and Japan |date=2004 |publisher=Cambridge University Press |isbn=978-0-521-54674-4 |pages=42–44 |language=en}}</ref> In 1881, 1884 and 1887, legislation tightened the restrictions.<ref name=":0" />

A law passed in 1897, the Handicraft Protection Law, stabilized a plant-based apprenticeship system in German industry. The law set limits on the number of apprentices a firm could take on and introduced a monitoring system for the quality of training.<ref name=":0" /> According to [[Kathleen Thelen]], this law played an essential role in cementing what would become the German model.<ref>{{Cite book |last=Thelen |first=Kathleen |url=https://books.google.com/books?id=I0afDJGPczwC |title=How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States, and Japan |date=2004 |publisher=Cambridge University Press |isbn=978-0-521-54674-4 |language=en}}</ref> The 1897 law was the result of bargaining between the state and the artisanal sector, which had a supportive relationship.<ref name=":1">{{Cite book |last=Thelen |first=Kathleen |url=https://books.google.com/books?id=I0afDJGPczwC |title=How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States, and Japan |date=2004 |publisher=Cambridge University Press |isbn=978-0-521-54674-4 |pages=39–41 |language=en}}</ref> Organized labor had a minimal impact on the legislation and the social democrats opposed the legislation due to suspicion of the traditional artisanal sector.<ref name=":1" /> Thelen writes that the impetus for the legislation was "deeply political and mostly illiberal."<ref name=":0" />

Over time, the social democrats were incentivized not to dismantle the system established by the law, as labor unions became increasingly filled with skilled workers trained under the apprenticeship system.<ref name=":1" /> In the Weimar Republic, German unions had become advocates of the in-plant training system.<ref name=":1" /> Gradual changes were made to the vocational training system in the 20th century.<ref name=":0" />

== Industrial relations ==
[[File:Germany-Tax-Revenues-As-GDP-Percentage-(75-05).JPG|thumb|right|350px|Tax revenues as a percentage of GDP for Germany in comparison to the [[OECD]] and the [[EU 15]], with Germany's rates consistently lower than the latter]]

Under the German model, [[trade union|union]]s are organized at the industry level and co-exist with [[works council]]s at both the plant and company levels.<ref>{{cite book |last1=Vitols |first1=Sigurt |year=2005 |chapter=Globalization and the transformation of the German model
 |editor1-last=Stubbs |editor1-first=Richard |editor2-last=Underhill |editor2-first=Geoffrey R D
 |title=Political Economy and the Changing Global Order |url=http://www2000.wzb.eu/alt/ism/pdf/globalization_and_german_model.pdf
 |edition=3 |location=Oxford |publisher=Oxford University Press |isbn=9780195419894 |access-date=2014-02-16
 |archive-url=https://web.archive.org/web/20140222001041/http://www2000.wzb.eu/alt/ism/pdf/globalization_and_german_model.pdf
 |archive-date=2014-02-22 |url-status=dead }}</ref>
These unions negotiate wage determination with [[employers' association]]s. The strength of this setup is the cooperation among unions and management councils. This is unique among Western countries, which have been marked by either substantial weakening of union powers (such as in the [[United States]] and [[United Kingdom]] since the 1980s), or consistent union conflict (such as in [[France]] and [[Italy]], where unions have remained strong).

== Consensus model ==

As in relations between unions and employers, the German model also seeks to harmonize relations between regulatory bodies and affected parties, as well as between individual companies to prevent ruinous competition within the scope of applicable antitrust law. Considered an outgrowth of the non-confrontational culture of postwar Germany, finding a common denominator was often the main goal in such relationships.

== Vocational education and training ==
{{See also|Education in Germany}}
[[File:Kaminfegerausbildung-2008 09 10 038.jpg|thumb|A [[modern chimney cleaning|master chimney sweep]] and apprentice in 2008]]
The system of [[vocational education]] is perhaps the most important component of the German model, and is still very prevalent in the German educational system. In Germany, there is a much heavier emphasis on [[apprenticeship]]s for skilled positions, taught by expert worker-instructors. It has been made possible through long-term politics, focusing on establishing stronger links between the dual vocational education and training system and institutes of higher education, on improving integration into vocational training through basic skills and permeability and on establishing national coverage of branch-specific regional initial and continuing training centres.<ref>{{Cite web|url=http://www.unevoc.unesco.org/worldtvetdatabase1.php?ct=DEU|title=TVET Country Profiles|website=www.unevoc.unesco.org}}</ref>

As such, there is a lower percentage of university students in Germany when compared to other Western countries, and a much lower percentage of persons entering the workforce for on-the-job training.

Vocational training is required for a large number of occupations. At the end of vocational training, a highly regarded certification{{Citation needed|date=May 2010}} qualification is awarded that is valid for a range of over 400 occupations. This is in stark difference to other European countries, where the number of controlled occupations is much smaller.{{Citation needed|date=May 2010}}

Critics cite inflexibility of the school system as the main disadvantage. Some 60% of graduates change their profession within 10 years of graduation.{{Citation needed|date=May 2010}}

== Financial and industrial relations ==
German [[bank]]s have a much larger role in shaping the industrial sector than those in other Western countries. Rather than simply collecting savings and investments and issuing loans, most German banks have large interests in the [[commerce|commercial sector]]. As such, many corporate boards offer seats to high-ranking German banking officials, whose banks are often investors in the corporation. As a result, they seek to promote long-term [[investment]] in the overall health of the companies they are working with.

== Future of the German model ==
Since [[German reunification]] German prosperity has declined compared to pre-unification West German levels, and the German unemployment rate reached record levels: 12.6% (according to national definition) as of March 2, 2005,<ref>{{Cite web |url=https://www.forbes.com/2005/03/08/cz_0308oxan_germany.html |title=German Joblessness Hits High, Economy Stagnates |website=Forbes}}</ref> the highest rate since World War II. The failure of the German model to maintain standards of high performance has led experts to speculate about its demise, despite having been adopted successfully in other countries' corporations since its peak. Others see the relative decline  as an unavoidable consequence of integrating the much less advanced GDR economy and 17 million new citizens, which necessitated a transfer of over 1.3 trillion Euros from west to east as of 2009.

Much of the political discourse regarding reforms in recent years revolved around the question of how to modify the German model (and the political conditions forming its framework) to sustain it in a globalised economy. Ex-Chancellor [[Gerhard Schröder]]'s reforms, called "[[Agenda 2010]]", made some steps towards such a goal, but also brought with them much controversy. Nonetheless, after years of 'painful' reforms, the German economy seems to have got back on track. 
The [[wage share]], however, measured as [[compensation of employees]] as percentage of [[gross national income]], was declining in Germany since the 1980s. 
[[File:GNIdistributionFRG.png|thumb|Components of [[gross national income]]]]

Unemployment has fallen below 10% (according to national definition) for the first time in years and economic growth reached 2.7% in 2006.<ref>{{Cite web |url=http://news.bbc.co.uk/2/hi/business/6356513.stm |title=Eurozone sees revival in growth |date=February 13, 2007 |via=news.bbc.co.uk}}</ref>

In June 2016, the unemployment rate was reported as 5.9% by the German Federal Employment Agency ([[Bundesagentur für Arbeit]]).<ref>{{Cite web |url=https://statistik.arbeitsagentur.de/ |title=Startseite - Statistik der Bundesagentur für Arbeit |website=statistik.arbeitsagentur.de}}</ref>

Whether this is an ongoing development is however a matter of continuing debate, as are further reforms.

== Counter-argument: Rise of the German model ==
[[File:Annual Export to 2008.jpg|thumb|Annual exports of different countries]]As of 2009 and the recent worldwide economic downturn, some analysts <ref>{{Cite web|url=http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/7837266.stm|title=Germany's orderly 'social market'|date=January 19, 2009|via=news.bbc.co.uk}}</ref> have speculated that the German model of social capitalism is resurgent and is the most responsible economic system that still ensures the survival of the [[free market]]. With recent economic schemes and company abuses, such as in the [[Bernard Madoff]] scandal,<ref>{{Cite web|url=http://www.iht.com/articles/2009/01/16/business/medici.4-409629.php|title=From behind the curtain, Madoff drew in victims in New York Times 2009-01-16}}</ref> the [[Enron#2001 accounting scandals|Enron scandal]], and the [[2008 financial crisis]], the German model of a rigidly structured and regulated economy has become more attractive.

From 2003 to 2008, Germany (a nation with only 80 million inhabitants) was the world's biggest exporter. In 2009, China (1.3 billion inhabitants) overtook Germany in exports.<ref>[https://web.archive.org/web/20090111205023/http://news.xinhuanet.com/english/2008-12/19/content_10528088.htm German export to remain world's biggest in 2008, difficult year ahead], cinaview at 2008-12-19.

[http://www.finfacts.ie/irishfinancenews/article_1018775.shtml German exports rose in November 2009; China overtakes Germany as the world's top goods exporter], finfacts at 2010-01-08.</ref> One of the reasons for this are the [[Hidden Champions]] as a result of the German Model.<ref>Simon, Hermann: Hidden Champions of the 21st Century : Success Strategies of unknown World Market Leaders. London: Springer, 2009.- {{ISBN|978-0-387-98147-5}}.</ref> Germany's [[Hartz concept|Hartz Reforms]] and a growing low-wage sector are believed to have weakened the core setup of this German Model.<ref>{{Cite web|url=http://theconversation.com/questioning-the-claim-of-germanys-employment-miracle-106895|title=Questioning the claim of Germany's 'employment miracle'|last=Tripathi|first=Ravi Kant|website=The Conversation|language=en|access-date=2019-09-23}}</ref>

== See also ==
*[[Economy of Germany]]
*[[Ordoliberalism]]
*[[Social market economy]]

==References==
{{reflist}}

== Further reading ==
*Ibsen, Christian Lyhne; Thelen, Kathleen (2024). "[[doi:10.1093/ser/mwae022|Arrangers and orchestrators: the diverging role of the state in Danish and German vocational education and training]]". ''Socio-Economic Review''.
*Edinger, Lewis J. and [[Brigitte L. Nacos]]. 1998. "Capitalism with a Human Face." pp.&nbsp;145–195 in From Bonn to Berlin: German Politics in Transition. New York: Columbia University Press.
*Streeck, Wolfgang. 1997. "German Capitalism: Does It Exist? Can It Survive?" pp.&nbsp;33–54 in Political Economy of Modern Capitalism: Mapping Convergence and Diversity, edited by C. Crouch and W. Streeck. London/Thousand Oaks: Sage.
*Roesler, Jörg. 1997. "The Rise and Fall of the Planned Economy in the German Democratic Republic, 1945-89." pp.&nbsp;482–497 in The Economic Development of Germany Since 1870. Volume 2, edited by Wolfram Fischer. Cheltenham, UK/Lyme, N.H.: Elgar.
*Pickel, Andreas. 1997. "The Jump-Started Economy and the Ready-Made State." Comparative Political Studies 30 (Apr):211-241.
*[http://www.unevoc.unesco.org/worldtvetdatabase1.php?ct=DEU Vocational education in Germany, UNESCO-UNEVOC]
{{Germany topics}}

{{DEFAULTSORT:German Model}}
[[Category:Economy of West Germany|!German model]]
[[Category:Political-economic models]]