Hans-Walter Schmuhl. Arbeitsmarktpolitik und Arbeitsverwaltung in Deutschland 1871-2002: Zwischen Fürsorge, Hoheit und Markt. Nuremberg: Bundesanstalt für Arbeit, 2003. xx + 776 pp. Illustrations, bibliography, notes, index. EUR 12.50 (paper), ISBN 0-173-657-4.
Reviewed by: Ulf Zimmermann, Kennesaw State University.
Published by: H-German (January, 2006)
Labor Policy in the Five Germanies, 1871-2002
Schmuhl has divided this exhaustive history of employment policy and employment administration into thee major sections: "On the Way to Employment Administration: From the Mid-Nineteenth Century to the Founding of the Imperial Institute for Employment Provision and Employment Insurance"; "Employment Administration between Democracy and Dictatorship (1929-1949)"; and "Employment Administration in the Federal Republic (1949-2002)." He has also included an "Excursus" on the GDR. Each section and subsection is introduced with relevant coverage of the demographic, economic, and social developments. A better, more comprehensive work on this subject--the economic history of Germany since unification in a nutshell--will be hard to find.
Thus between 1871 and 1914 Germany was propelled from a backwater to an economic leader, owing to basic processes Schmuhl identifies: population growth; rate of urbanization; increases in mobility and migration, chiefly from the east, the biggest in German history; industrialization; the replacement of the old class system with a market society, with an extensive working class and a large middle class below the bourgeoisie. This social change raised the "social question"; responses to this problem came in health, accident, invalid, and old age insurance, as we know, but not in workers' protection or rights. Insofar as anything was done for the unemployed it was done by the cities, a sort of "municipal socialism," which eventually led to the welfare state.
Industrialization attracted immigrants. Germany absorbed the largest number after the United States. These workers were in constant fear of losing their jobs since they were completely dependent on their employers. As it came to be recognized that employment depended on economic conditions, it became clear that unemployment was not the worker's fault. Workers shared job lists they had developed, and in 1890 employers started doing the same, with cities following suit and establishing their own employment exchanges. The need for vocational counseling, especially for women, started to be met with Wilhelm Lette's Lette-Vereine. It would be a long time before unemployment insurance (discussed in academic circles as early as 1879) came. In the meantime trade unions provided some insurance and cities supplemented their funds. The SPD promoted a national insurance system, but the parliamentary majority contended that the unemployed could always return to farms which were begging for workers.
During World War I unemployment gave way to labor shortages, necessitating the hiring of women. Employment counseling caught on in the wake of U.S. use of IQ tests, and such instruments were applied to gauge candidates' job suitability. The unions provided for those still unemployed, until it became necessary for cities to help out. The national government aided only soldiers. Needs brought about by the war and its consequences finally led to an active employment policy. The new constitution stipulated that every German should have the opportunity for suitable employment, or (alternately) the necessary support. This support was still left to the cities, however, and between high unemployment and inflation, they were vastly overburdened.
Not until 1927 did parliament pass a law creating an "Imperial Institute for Employment Provision and Unemployment Insurance." This had its head office in Berlin, with a unified network of state and local employment centers to take the burden off the cities. Unemployment insurance served those employed in the previous year but unable to find work in the previous week. Workers' pay-ins of 3 percent were often insufficient to cover the resulting costs; the system introduced welfare supplements. Schmuhl rightly calls this change the most significant social policy innovation of the Weimar Republic. By 1932 over 30 percent of the workforce were unemployed. As Schmuhl insightfully points out, this lack of employment and camaraderie among fellow workers helped give rise to groups like the SA and to promote their growth. Further fueling this trend was the dictatorial rule of the last chancellors of the Republic, who substantially reduced unemployment benefits. Workers felt like playthings of the bureaucracy.
When the Nazis came to power the basic structures remained the same, except for the racial policy, the codetermination of the unions, and the notion of individualism (this was supposed to be a Gemeinschaft, after all). They promoted families with special benefits, eliminating many women from the workforce. The National Socialist government got people back to work, albeit with lengthened work hours, limited pay, and more extended vacations. Hitler's reduction of unemployment to 7.4 percent (while it was still 24 percent in the United States) required workers to accept employment for any wage and sometimes living in camps. The right to work was replaced by a duty to work. Accordingly, the NS government steered workers to wherever work was needed, in a sense "militarizing" the employment market. The National Socialists maintained the Weimar structure of the Institute, but filled its leadership positions with "old fighters" and promoted NS ideology in employment counseling.
As militarization increased, women under 25 were required to do a year's work in the military or on farms; Jews were placed into forced labor. But this military buildup was far from adequate until Speer tripled it between 1942 and 1944. With practically every able-bodied man in the military, it became necessary to hire foreign workers, many of whom came voluntarily because of unemployment in their home countries. To this was added the forced labor of POWs and 700,000 Poles. Jewish labor was necessary for this effort until 1942, when there were enough Polish workers to replace them. Not long after the new policy of liquidation was put into effect, though economic necessity required the employment of 1.5 million Hungarian Jews.
After the war, the employment system was in the hands of the occupiers, who had to deal with refugees from eastern areas and ten million displaced persons. Difficult circumstances were eased by the creation of the British-American bizone in 1947 and the introduction of the Marshall Plan and the currency reform in 1948. Policies obviously took different directions in East and West. In the West, the new Basic Law of 1949 made employment a federal responsibility. Its tasks were complicated by youth with interrupted job training, returning solders and POWs, the disabled, and former Nazis. In his excursus on the GDR, Schmuhl notes that the state guaranteed everyone a right to work but they also had a duty to work. With the planned economy, unemployment statistics disappeared. The exodus to the West meant that problems with unemployment were few. To compensate for the losses to the West, increasing numbers of women were employed, reaching over 90 percent by the late 1980s.
In the Federal Republic, the social security system of the Weimar Republic was fully in place again by the 1950s. With the economy fired up by the Korean War, vastly more work for un- or underutilized industrial capacity was available (though that emphasis would leave the country behind in high-tech industries). By 1960 there were more jobs than workers, which led to the employment of Gastarbeiter. Only in 1957 was a new law passed to supplement the Weimar provisions. Its result, the new Bundesanstalt, prioritized the provision of work, especially for the larger segments of youth seeking employment, and local representatives of the Institute went to schools to offer employment counseling and make students aware of the help they could provide. The Institute also integrated thirteen million Eastern refugees and GDR escapees, helping them get to the places where workers were needed. As Schmuhl rightly notes, the "economic miracle" could not have taken place without their numbers and skills. Increased reliance on Gastarbeiter was viewed as not only helping Germany but also benefiting the home countries (most importantly, Italy, Spain, Greece, and Turkey) by relieving unemployment there and sending these workers back with enhanced skills. By 1973 foreign workers constituted nearly 12 percent of the workforce, with Turks the largest contingent.
As technological developments proceeded and the service sector grew, reactive policies became insufficient. The recognition that the skills workers learned would not carry them through their working lives required lifelong learning and improvement in skills--and entirely new employment laws. Thus in 1966 and 1967 new job training and employment promotion laws were passed. A law that stressed unemployment prevention, education, and help in choosing the right kind of job was passed in 1969. Accordingly the institute was renamed the Institute for Employment. The recession and "stagflation" of 1973-75 led to an increase in unemployment that generated public works programs and saw an end to the acceptance of new Gastarbeiter. Unemployment hit foreign workers especially hard, and some firms offered them substantial bonuses to return home. By now a second generation of foreign workers was beginning to seek work.
In 1982 the new conservative regime reduced unemployment benefits, subsequently backing down a bit, especially in regard to retraining older workers. Schmuhl sees this policy as a failure, only topped by the quot;unification crisis,quot; which showed that the East had been living above its means, had a huge debt, no export market, and (after the Wende) a collapsing internal market as well. Three fifths of the working population lost its jobs; one fifth found other jobs; the other fifth remained unemployed or took early retirement. The Treuhand found that only one quarter of the four million positions in the GDR was sustainable. By 1992 the needs of this population, which had been accustomed to guaranteed jobs, strapped the Bundesanstalt, which led to the endangerment of Germany's compliance with the EU deficit requirement.
The Schröder administration renewed an emphasis on employment--workers were urged to take jobs even if they paid no more than unemployment. The new Job-AQTIV law (2001) urged proactive trips to the employment office and adopted the Swedish practice of job rotation. The regime promoted community infrastructure improvements and brought in firms to hire the unemployed. Workers found that this strategy violated their right to pick their own jobs. Private employment agencies emerged with greater incentives to find jobs for their candidates. They accounted for only about 5 percent of jobs versus 30 percent for the Bundesanstalt--but 70-80 percent of jobs were found without using the institute anyway.
The latest reform of the Bundesansalt stresses customer orientation, effectiveness, economy, and codetermination. As Schmuhl correctly concludes, the new world of work requires an approach in which both works and employment offices will have to be more flexible, and in which states and communities will have to provide employment rather than unemployment insurance. Schmuhl has succeeded in adeptly placing this labor policy history in the broader historical and political context and aptly making the causal connections. He has thereby provided not only the most comprehensive resource on the subject, but has also laid a firm foundation for any future studies of German labor politics and policies as well as clear lessons for policymakers in any other country.
Citation: Ulf Zimmermann. "Review of Hans-Walter Schmuhl, Arbeitsmarktpolitik und Arbeitsverwaltung in Deutschland 1871-2002: Zwischen Fürsorge, Hoheit und Markt," H-German, H-Net Reviews, January, 2006. URL: http://www.h-net.org/reviews/showrev.cgi?path=308121145975241.
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