Germany’s economic resurgence due to decentralised wage bargaining rather than Hartz reforms: new research
The astonishing transformation of the German economy from the ‘sick man of Europe’ to a lean and highly competitive economy is predominantly due to the decentralisation of wage bargaining rather than government labour market reforms, according to new research led by UCL.
The resurgence of the German economy has often been attributed to government policy, notably the so-called ‘Hartz reforms’ implemented in 2003. But research, forthcoming in the Journal of Economic Perspectives, suggests that it is instead down to the inherent flexibility of the German system of industrial relations – most specifically, the autonomy of labour market institutions to set wage rates – that has led to a dramatic increase in the competitiveness of the German economy. (more…)