European labour market deals with unemployment

This should give you an impression of the European labour market in general and an in depth view of the British and the German labour market. Furthermore it shows differences in the approach of fighting unemployment. Government invests greatly into the labour market and managing unemployment. Evidence can be found in laws, training schemes and social benefit. Germany and Britain are following quite different tracks to fight unemployment. More then two years ago the British government decided to introduce national minimum wages to prevent a widening pay gap throughout regions. Advantages are obvious – as workers get a higher income they can spend more money on food, health, education and children. Another advantage for the state is that the increased wage takes some workers over the state benefits threshold. The state saves money and the burden is assumed by the private sector. The German government also introduced minimum wages but only for certain sectors and for other purposes. Wages only exists in two sectors: construction work and roofers. The aim was to stop companies recruiting cheap labour from the former East Bloc and therefore gain competitive advantages. As trade unions have a strong position in Germany most sectors have a kind of minimal wage set by negotiation between trade unions and employers’ federations. Britain’s employment laws are probably the most lax labour laws in Europe with the policy of attracting investment in mind. It should give Britain a competitive advantage against the other European states because labour is one of the more expensive and inflexible production costs and therefore crucial to investment decisions. In Germany the employee’s representative must agree to the terms of proposed redundancies. The company is also obliged to help find alternative employment and in areas of high unemployment they also have to pay a kind of tax to the state to help fund training initiatives. Additionally companies have to pay compensation for loss of office depends on the employees job tenure. Which country has the better way of fighting unemployment??? It is not that obvious, but you can make your own opinion.


One thought on “European labour market deals with unemployment

  1. I think to high set minimum wages can by risky because companies can decide to outsource their production to low wage countries because the don’t can cover the costs. So the government has to consider well if it requires minimum wages. I think this was also the reason which lead Germany not to set minimum wages in all areas.


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