Labor Market in Germany - Case Study Example

?Labor Market in Germany Introduction: A labor market can be defined as the place of meeting employers and the workers or in other words we can also say that job holders and the job seekers. Here the labor or the job seeker tries to get a best fit and suitable job, which is according to his potentials and the capabilities. On the other side the employer also try to seek the highest potential worker or the man power to employ. In other words we can also say that the labor market aims to facilitate the demand and supply of the potential and capable labor. This demand and supply cycle may also be influenced by the certain market factors. These market factors may include the compensation packages, daily wage rates, additional benefits and the most important one is the involvement of technology involved in the industry. As much as there is technology involvement the demand of labor will be affected by this. The fluctuation of labor market also indicates the unemployment or the employment rate of any economy. This unemployment rate is high if more technology is involved in any industry otherwise it will be low. There are certain numbers of economies who have maintained their employment rates by utilizing the entire available workforce. Germany is one of the economies who have managed their available and also potential labor and thus maintaining the labor market also. Main Body: Due to the involvement of technology in almost each and every sector, now the conditions or we can say the requirements of the labor market are very much changed. Now the companies need a highly skilled and capable work force which can be a source of competitive advantage for them. The available labor at the lowest possible cost can be a foundation of competitive advantage. The quantity of labor and the capabilities of labor may be inversely related to each other. If there is technology involved then there will be less requirement of highly capable labor but if technology is not involved then there will be more needed manpower. These conditions can cause the fluctuations in the demand and supply of the labor market. There can be certain factors for a well managed labor market. These factors may include the demographical changes, the strength of the industries of that economy, the actions taken by the Government and even the willingness of the people to be employed anywhere. This willingness or the eagerness can take them even across the boundaries also. Germany is at fourth position among the largest economies in the world and also has a strong industrial base. It is also included in the list of those economies that enjoy a major part of revenues from foreign trade. There are certain medium and even small companies that cover almost two third of the workforce of the country. Germany is currently included in the list of those countries that are enjoying the lowest unemployment rates as compare to the other economies of the world. Particularly there is a variety of job availability for the young professionals also. For maintaining the labor work force, Germany is doing a good job among European Union Countries also. Even in some regions of the Germany, specifically in Southern parts there is a full employment situation also just because of managing the work force availability at a proper and right time. Companies try to utilize the fresh and energetic young professionals by giving them apprenticeship during or just after their studies and thus giving them training also (Germany’s Vibrant Labor Market). If the companies find the required talents during the apprenticeship then they may also hire these young individuals as a permanent employee for their organization. This managed work force or we can say the developed labor market is not very old in the Germany. In 2005 the unemployment rate of German economy was the highest one as compare to other countries. But then the Government officials handle it. And now they have excelled over it. There can be two reasons for this almost full employment situation. One can be the Government economic reforms and the other one is the impact of demographic change. It seems that new fresh graduates are replacing the old retirees at a faster pace (Germany’s Vibrant Labor Market). The German economy showed this development in the labor market just after its recession period. According to certain economists this development can be termed as the job miracle. Not only Government is involved but also the companies at every level tried their best to handle the earlier crisis situation. They took certain steps like cutting labor costs and avoid the dismissals of the manpower. The cutting of labor costs may help the organizations and the removal of dismissals will enhance the productivity of the man power. The flexibility of the labor market has also increased due to certain changes. These may include differences in the working time, offer of social benefits and also the labor rights (The changing Labor Market in Germany in times of Crisis). German economy used the flexibility of the labor market as a modernizing tool (Marx & Eichhorst, 2009). They took advantage of it and now they are famous for their developed as well as a flexible labor market. According to certain theorists the smooth flow of income or wages is a natural regulator of the labor market (Klau & Mittlestadt). This may also cause the flexibility of the labor market. Flexibility of the labor market can be a multi-dimensional term regarding many included factors. This labor market flexibility is not only set by the individuals but also devised frame work for the industry (Earlinghagen, 2004). One of the important factors involved in the development of the labor market is the performance of immigrants in the host economy because due to globalization of individuals they are also major contributors towards economic conditions (Kauhanen & Kangasniemi, n.d.). The skills and the high qualifications of the foreigners may add to the potential of the labor market. In case of Germany the rate of employment in immigrants is low as compare to natives because of certain legal regulations. They are not free to be employed anywhere and in many other cases the employers may not want to adopt other than Germans. If the labor market of any economy is highly developed then it will definitely aid to strengthen the industrial world and thus having growing businesses as well. The people will be more satisfied and thus the output productivity will be more. Therefore the Government should aim for the development of the labor market. The labor market entry should not be restricted in the countries because it is also possible that the potential capabilities can be hired form other geographical areas also. So the restrictions should be low or we must say that the foreigners should be welcomed for the growth of the economy. There is a trend in many economies that the young people may join the jobs and then enter into the higher education also. This tradition not only helps them to prosper but also polish their skills. But in certain other economies the young professionals when entered in the labor market then they do not like to re-enter the education field. They usually stick to their jobs. In either case the labor market may perform well but in first case the labor market in specific and the industry in general will prosper as well. Conclusion: During last decades there are many social, economic and technological changes in the world. These changes are often termed as the globalization. In this century, almost every country and the economy is connected with each other due to the globalization factor. Every related country has to face the economic crisis or even boom when there is any fluctuation in the economics of the global economy. And when this fluctuation affects the labor market then not only work force but also the employers are also affected. Earlier the European economy was considered very good and attractive but now the time has been changes. Germany is also known for its creation of jobs and thus reducing the amount of national debts. Although Germany is having a well managed labor market but it is not possible to predict that whether they will be successful to maintain it or not? This is because of the reason that ups and downs can be expected anywhere and at any time. But still at present time we can say that Germany labor market is a very good and opportunity for potential work force and also for the employers not only from Germany but from abroad countries also. Germany is also famous for a high level of employment for the young professionals. And thus the labor market can be regarded as the stable one as compare to many other countries. References: Earlinghagen, M. (2004) Internal and External Labor Market Flexibility in Germany-A critical Overview. Institute Arbuit and Technik, Gelsenkirchen, Ruhr University Bochum. Germany’s Vibrant Labour Market (n.d.). Germany?s Vibrant Labour Market - Make it in Germany. Retrieved from http://www.make-it-in-germany.com/en/working/prospects-in-germany/germanys-vibrant-labour-market/ Kauhanen, M., Kangasniemi, M. (n.d.) Characteristics and Labor Market performance of the new member state immigrants in Finland, Germany, the Netherland and the United Kingdom after the enlargement of 2004. NORFACE MIGRATION Discussion Paper No. 2013-02. Klau, F., Mittlestadt, A. (n.d.) Labor market flexibility. Pg 7-45. Marx, P., Eichhorst, W. (2009) Reforming German Labor Market Institutions: A Dual Path to Flexibility. IZA DP No. 4100. The changing labour market in Germany in times of crisis (n.d.). The changing labour market in Germany in times of crisis: A KEY FOR EFFECTIVE INDUSTRIAL RELATIONS BRIEFING ON THE SITUATION IN GERMANY. Retrieved from http://www.solidar.org/IMG/pdf/19_solidar_brochgermany-2.pdf Read More