Euro crisis, Energy Policy Turnaround, Economic Slowdown: is this the End of the German “Job Market Miracle”?

What are the factors responsible for the “German job market miracle”? Dieter Hundt, Confederation of the German Employers’ Association, believes that success is due to the responsible actions of the parties concerned, the use of time credit systems and strong policy decisions on issues like short-time working allowances. This shows that wage negotiations in Germany function well even under extreme conditions. Frank-Jürgen Weise, German Federal Employment Agency, Nuremberg, presumes that the positive trend in the employment market will continue in 2012, and that the number of unemployed will remain below the 3 million mark. In the view of Hagen Lesch, Cologne Institute for the German Economic Research, the healthy development of the labour market is influenced by three factors: labour hoarding during the crisis, a moderate wage policy and the labour market reforms undertaken between 2003 and 2005. Wolfgang Lechthaler, Institute for the World Economy, and Christian Merkl, University of Erlangen-Nuremberg, expect Germany to suffer only moderate recession shocks on condition that there is credible budget consolidation in Southern Europe and that current account deficits are reduced at the same time. In other words, the German labour market can absorb a soft downturn.