Timo Weishaupt

Two worlds but one vision of the social market economy?

Timo Weishaupt, University of Göttingen, nstitute of Sociology

» Full paper: ilera-2019-paper-260-Weishaupt.pdf

In the midst of the Great Recession that caused a massive economic downturn throughout the advanced capitalist democracies, Germany transformed its global image from Europe’s sick man to miracle performer. The literature has well documented that the reduction of working time, especially among manufacturing firms, was the key explanation for the German Sonderweg.

In this paper, three questions are being asked. First, what role did the social partners play in German firms’ choice to hoard labour, given wide-spread reluctance amongst management and creditors? Second, what, if any, effects did the crisis management have on neo-corporatist arrangements both at associational and political level? And third, how do the experiences in the manufacturing sector contrast with those in the service sector? With reference to the Varieties of Capitalism approach, the paper argues that well-functioning, neo-corporatist communication channels within the Federal Employment Agency, the proactive role of employer associations at federal and regional level, and the ‘watch dog’ role of firm-level metal labour unions were crucial in implementing the labour hoarding strategy on a nationwide scale. Given the political pragmatism of the Chancellor and the positive experience with crisis management, the neo-corporatist exchanges subsequently led to an institutionalization of new multi-partite platforms and working groups, a political return to the Social Market Economy paradigm, as well as a stabilization of, if not increase in, the membership base in employment associations and IG Metall. While the manufacturing sector re-emerged stronger from the crisis, the experiences in the service sector are bleaker: membership has continued to decline, trust in collectivism has faded, and open conflict and strife have been prevalent in many regions.