"The 'Dark Side' of Deregulation? The Politics of Two-tier Labour Markets in Germany and Japan after the Global Financial Crisis

For much of 2009 Germany and Japan appeared to be among the countries most severely affected by the global economic and financial crisis. Apart from a steep decline in quarterly growth rates, they also experienced dramatic employment adjustment processes unseen perhaps since the 1970s. A closer look reveals, however, that the increased unemployment risk in both countries so far has been shouldered almost exclusively by a distinct class of non-regular employees who together account for over 30% of total salaried employment. By March 2009, for instance, more than a quarter of all temp agency workers in Germany and a similar number in Japan had been made redundant while the figures for regular employment appeared almost unscathed. . . . In general comparative terms, it seems as if the lasting functionality of traditional forms of regular employment in Germany and Japan is a blessing and a curse at the same time. It is a blessing because it apparently enables Germany and Japan to limit the overall effect of the current crisis on employment at least this far, and to limit non-regular and perhaps even precarious work to an extent. It is a curse because it seems to bar governments from effectively regulating labour markets and adjusting systems of social protection, for instance in the sense of 'flexicurity' which would mean comparable levels of job security and social protecting for all workers regardless of their mode of employment, for the price of less employment protection overall, which could increase chances of non-regulars to become regular workers. Some of the more pressing social problems, such as low wage levels of unskilled and young workers and limited employment prospects for women (who make up more than 60% of all non-regular employment), may only be addressed with more government interventions, for instance in the form of more ambitious minimum wages or better childcare facilities (Germany and Japan are clearly behind other countries in this aspect). So far, however, German and Japanese governments have left most regulatory answers to the crisis to collective bargaining and have usually intervened only to the benefit of regular employment, by expanding employment maintenance measures.

Read Steffen Heinrich's analysis in Social Policy Review