Similar Challenges, Different Solutions: Reforming Labour Market Policies in Germany and Canada during the 1990s

Abstract

Canada and Germany experienced considerable economic challenges and political shocks during the 1990s. High unemployment and regional labour market disparities raised concerns about the adequacy of labour market policies in both countries. Yet despite similar challenges, the two federations pursued different reform paths. Unemployment insurance programs were only marginally changed in each nation. With regard to active labour market policies, however, Canada pursued an asymmetrical decentralization granting more power to the provinces, while Germany reinforced its corporatist mechanisms. Explaining the different reform paths requires consideration of a range of variables including the contrast between Germany's intrastate and Canada's interstate federalism.