The path towards greater labour flexibility in Germany: hampered by past success?

Abstract

Analyses the tensions between change and continuity in the German model of labour flexibility and examines why recent deregulation and decentralization measures only had a limited impact on companies’ flexibility approaches. Addresses the subsequent issues of how, and to what extent the framework for the several forms of flexibility should be broadened in the particular German context, where the institutional/regulatory environment has encouraged the widespread adoption of a diversified quality production strategy, based on high levels of functional flexibility. Concludes that a large section of German companies may already operate near an optional labour flexibility mix. Suggests system internal reforms based on regulated flexibility and centrally co‐ordinated decentralization, in order to enhance, to some extent, the framework for flexibility without undermining the underlying incentive structure for high skills/high productivity approaches to flexibility.