Project: Economic Dynamics and Employment

The German labor market is currently quite healthy. However, given the presence of cyclical uncertainties, ongoing processes of change and persistent structural problems, Germany’s positive indicators should not lull policymakers and other stakeholders into complacency.

Underlying our work is an understanding of a robust and nondiscriminatory labor market as a condition of economic dynamism as well as a prerequisite for social inclusion. A modern labor-market policy must ensure the broadest possible participation in employment at reasonable wages without thereby endangering innovation, competitiveness and thus ultimately opportunities for growth.

• Globalization and increasing interconnectivity are intensifying the international division of labor, so that it is no longer only the less skilled who must fear a relocation of their jobs abroad.
• Technological progress and the digitization of the economy are creating new business models and opportunities for growth. At the same time, these trends endanger a number of activities requiring only low or middling skill levels, which can be automated in the future. A lack of job security and rising wage inequalities are among the consequences of these developments.
• Societal aging will reduce the number of employed people in Germany over the long term, thus undermining the financial basis of the social security system.

The labor-market and social-policy reforms carried out in Germany in recent years, such as the statutory minimum wage and the increase in the retirement age, represent early responses to this set of problems. However, they also create new challenges for the German economic and social model.

Finally, the situation in other European countries also offers grounds for concern. Virtually all southern European countries are suffering under a deep and protracted recession. Conditions remain most difficult in Greece and Spain, where youth unemployment levels remain high.

By means of studies and analyses, the Economic Dynamics and Employment project investigates the challenges faced today by labor markets and social security systems across the European Union, identifying possible courses for policy action in Germany and Europe. To this end, we consistently look beyond national borders in order to learn from successful policies abroad. Through intensive dialogue with representatives from civil society, business and the policy field, we additionally aim to draw societal actors' attention to the looming challenges, and jointly develop constructive solutions.