Social Policy: The Rise and Fall of Welfare Corporatism
Organized business and labor in Germany are both governed by the social security system. This has caused interdependence among the following: collective bargaining, the status and structure of intermediaries, and the social policy of the government. The way these three concepts were linked in Germany gave rise to a ‘pathological’ response to the emerging employment problems after the first oil crisis in areas such as unemployment insurance, labor market policy, and the pension system for the management of the labor supply. Although this situation maintained the spread of low wage and the rigid high wages caused by the collective bargaining system, the German economy experienced a lasting low-employment equilibrium. There was then a need for institutional reforms that would diminish the political status and power of organized business and labor.
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