Active labour market policy in Germany: an interview with IAB Director Joachim Möller
conducted by Hannah Ormerod

Hannah Ormerod: Professor Möller, I’d like to ask you about active labour market policy in Germany. What are the underpinning principles of Germany’s active labour market politics?

Prof. Joachim Möller: In general, active labour market policy plays a big role in Germany, and I think the combination of these labour market instruments together with evaluation research is quite successful. Our institute evaluates the different measures that are available for active labour market policy, and we see differences in the effectiveness of the instruments. And I really can say that policy reflects the results coming from research and changes also the design of the instrument. I think it is quite a nice experience.
Yet, the underlying principle, I would say, is also under the motto of supporting and demanding, and, in general, it leads to fostering the integration process to a labour market. I think, a really important point is that the instruments and programmes of active labour market policy should be really tailored to the needs of the workers. And just one example of how something that works for one group, does not work for another is the relatively intensive use of workfare in Germany. Our research shows that for some of the groups this is really an effective measure; by the way, we call it the one-euro jobs because people that are participating earn an additional roughly one euro per hour more than they get for the social benefits. The one-euro jobs are working quite well for people that are relatively far away from the labour market. This could be an instrument to make them approach the needs of the labour market – this has positive effects. But if you, for example, put some young people, relatively close to the labour market, in such workfare programmes, then the effect is negative: they are not integrated in the, say, normal labour market – they stay in this artificial sector, so to speak, and they are not integrating. We found it out, and the policy has responded to the research result; so now, the young people who are close to the labour market are not included any more in this sort of programmes, or it has been reduced.
Another example is what we called Arbeitsbeschaffungsmaßnahmen – a typical monster-word in German – which means “opportunities for work” [aka job creation schemes] – additional jobs that were created by the Government. This was after German reunification: a huge number of such jobs were created at that time. And research found out that, in the end, the effect for most of the people was negative. They did not integrate into the normal labour market because they were used to having the artificial well-payed jobs, and this was negative. But, of course, at that time it was necessary to respond to the huge increase in unemployment figures, so it was really highly needed to have an instrument that gets people into work. Yet, the long-run effect tended to be negative. Today, we have only few of this sort of jobs, but we see a specific group of people that are really-really hard to integrate into the labour market: if they have health problems, for example, or other forms of mental problems, et cetera. And so we need, I suppose, a certain number of these what we call social jobs to include these people or to give them opportunity to have a, say, normal job or normal life, because the work is very important for integrating people into society, and for this kind of people we need this sort of jobs. But only, I would say, to a limited amount. Our estimates are that roughly 200,000 of these jobs are necessary for Germany in total.

Hannah Ormerod: You mentioned these 200,000 extra social labour market jobs. Do we know anything about the sort of outcomes that these measures have on this group of participants, and what is the goal – the underpinning goal – behind these measures?

Prof. Joachim Möller: Well, the priority of this measure is not to get people into, say, normal employment contracts, because these people have health problems, they have mental diseases, et cetera, et cetera. This means that their chances of getting a normal contract are really-really low. And so, the priority in this case is to stabilise people, to give them self-confidence to get into contact with other people. I think that inclusion in society requires being a member of a working society. This is the priority in this sense, and I think it should be taken seriously.