Labour market policy

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Labour market policy

A successful labour market policy is of central importance for people in Germany and for the German economy. Work not only means being able to earn a living, but also social participation, recognition and personal fulfilment. In view of the need for qualified employees and demographic change, it is crucial for the economy and society that all potential is exploited to the full and that all people can participate in the labour market in the best possible way.

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Aligning labour market policy with the challenges of the future

20 years ago, Germany was the "sick man" of Europe with over 5 million unemployed. Since then, the labour market situation has improved significantly and the labour market has long been an anchor of stability. The consequences of the coronavirus pandemic and the war of aggression in Ukraine were also mitigated thanks to the massive use of short-time working allowances.

However, the situation has now reversed, as the weak economy is also affecting the labour market. The reserves of

the Federal Employment Agency (BA)

have been almost completely used up due to the high expenditure on short-time working allowances and unemployment is rising. Matching problems on the labour market are increasing. The retirement of baby boomers is increasing the shortage of skilled labour, while long-term unemployment is becoming more entrenched.

Qualifications in demand on the labour market are the best protection against unemployment

In view of the increasing structural change in the economy, qualifications, professional flexibility and lifelong training will play an increasingly important role. Good qualifications are the best protection against unemployment. For this reason, the BA must also focus on young people right from the start of their training and working lives and, where necessary, provide them with targeted support during the transition from school to work in close cooperation with the responsible federal states and other stakeholders. In addition, low-skilled workers must be supported as far as possible on the path to a vocational qualification if they are personally suitable and there is a labour market need for the target occupation. To this end,

Partial qualification programmes

can also be used. The best solution is always in-company training, which must be prioritised with all support services, especially for under 25-year-olds. However, training is not a panacea. It must not be a pie-in-the-sky approach, but must always be geared towards the needs of the labour market. It remains important to achieve integration back into work as quickly as possible and then to complete the necessary training on the job wherever possible.

Fundamental reform of labour and social administration necessary

Unemployed people are supported either by the contribution-financed unemployment insurance (SGB III) or the tax-financed citizen's allowance (SGB II). However, employers do not want two points of contact simply because unemployed people are looked after in different legal systems. The system of labour and social administration with employment agencies, joint institutions and municipal job centres is highly complex, non-transparent and therefore unnecessarily expensive. The labour and social administration for people capable of work must be fundamentally reformed. Only with a comprehensive structural reform, which also includes the bundling and pooling of cash benefits, will the labour administration remain capable of acting. Then it can fulfil its mission of getting people into work and supporting companies in securing jobs and skilled workers.

Unemployment insurance to focus on core tasks

The primary task of unemployment insurance - in addition to paying unemployment benefit and short-time working allowance - is the professional, rapid and sustainable placement, counselling and support of the unemployed. Only within narrow limits and with a clear division of responsibilities does unemployment insurance also take on preventive tasks that serve to avoid unemployment or ensure a quick start to working life, such as career guidance and counselling. The role of the Federal Employment Agency in labour migration must therefore also be domestic and focus on labour market admission and advising employers on immigration opportunities. The federal government's tight budget situation is leading to a shift of tasks and costs to unemployment insurance. However, contribution funds must only be used for insurance benefits and contribution-financed and tax-financed benefits must be clearly differentiated again.

The

Continuing vocational training

for employees is primarily the responsibility of employees and employers. No one is better at training than companies. Further training support for employees through unemployment insurance must be consistently focussed on labour market policy necessities. This is where the BA and unemployment insurance make their original contribution and provide impetus for lifelong learning. This is closely interlinked with lifelong career counselling by the BA, which should always take place in large networks and where possible as referral counselling

Short-time working allowance: an important instrument in times of crisis

Short-time working allowance made a significant contribution to stabilising the economy and securing employment during the 2008/2009 financial and economic crisis and also during the coronavirus pandemic. The possibility of being able to react quickly and flexibly in comparable crisis situations with simplified regulations on short-time working should be maintained. It must also be ensured that the short-time working allowance can be administered by the BA and employers even if it is used on a large scale. However, short-time working allowance is not a panacea, especially not in times of structural change.

More personal responsibility in basic income support

The activating welfare state in Germany must be strengthened and the focus must once again be placed on those who are actually in need. In addition to more incentives to work through improved regulations on additional earnings, more commitment in the placement process is also required for sustainable basic income support. Placement must be prioritised again. At the same time, job centres must be relieved of unnecessary administrative work and benefit legislation must be made less bureaucratic. Existing labour market policy support instruments must be combined more flexibly and sensible support chains must be formed in which the next support steps are planned in advance, what has been achieved is regularly reviewed and readjusted if necessary. Systematic skills diagnostics, intensive support in the necessary cases and follow-up support even after successful integration are crucial in order to stabilise and secure employment.