Unemployment is a problem for every member state in the EU, even though the numbers of unemployed people vary from country to country. Especially for the countries which are grouped into the continental system (France or Germany) the problem is severe. On the other hand other countries have improved their markets and now have less unemployment than in the 1980th, for example Great Britain or Spain.
However, in every country one group is seen as especially problematic and those are the low skilled workers. Persons without good education or professional training run a high risk of becoming unemployed. Compared to academics in Germany their number unemployment is four times as high in this group. This is partly due to the fact that the global competition has become stronger during the last years. Since the wages in other countries are lower this leads to cheaper production cost for the companies in those places. Especially for labour intensive industries this is a problem, and those industries normally provide the jobs for low skill workers. Thus all countries have taken measures to integrate this group better into the world market.
The leading question for this paper is why Great Britain has been more successful in integrating this group in the work market than for example Germany. One program that will be introduced is an earned income tax. This means that low skill workers become additional money, for the case that they have a job that pays only little money. With this program the British government motivated people to take jobs, even though the hourly wage is not high. This program worked well and got extended in April 2003.
In the end of the paper the question will get discussed if the earned income tax would even be an option for the whole of Europe. Since companies act on a worldwide market, some employment problems extend the boarders of nation states. In order to answer this question, the actual politics in this field of the EU will shortly be described. Social policy was historically never one of the most harmonized fields. But with the Maastricht and especially with the Lisbon strategy member states agreed to certain measures in this field. The question is how far this arrangement go, and whether or not an earned income tax is realistic in the near future for low skill workers.
Table of Contents
1. Abstract
2.Unemployment in Germany-Statistic
2.1 Low skill workers
2.2 Situation of low skill workers in Germany
2.3 Social benefits in Germany
2.4 Hartz IV Politics
2.5 Conclusion of the German job market
3. Unemployment in Great Britain
3.1 Situation of low skill workers in Great Britain
3.2 Earned income Tax
3.3Comparison between Germany and Great Britain
4. European social policy
4.1 Recent measures
4.2 Earned income tax on EU level?
5. Conclusion
Research Objectives and Topics
This paper examines the high unemployment rates among low-skilled workers in Germany compared to Great Britain, investigating whether implementing an earned income tax at the EU level could effectively incentivize employment and improve labor market integration for this vulnerable group.
- Comparison of labor market integration strategies between Germany and Great Britain.
- Analysis of the structural barriers for low-skilled workers in continental labor markets.
- Evaluation of the "Hartz IV" reforms and the British "Working Family Tax Credit" model.
- Assessment of the feasibility of harmonized EU social policies regarding redistribution.
Excerpt from the Book
2.1 Low skill workers
In highly industrialised countries specialised and complex abilities are needed in most jobs. Since the globalization of the world offers chances for companies to produce virtually everywhere, the competition for market shares becomes harder. Factories often get moved to places where the hourly earnings are far below German and European standards. China for example has a lot of workers which are willing to work for a fraction of the wages paid in Germany. Thus highly industrialised countries have to invest money into research and education in order to create knowledge which is not existent in other countries.
But participation is not possible for everybody, as recent statistic show. Germany has an education system that separates students after the fourth grades. Three different secondary school types are provided; the teachers normally give recommendations which school the students should attend.
The “Abitur” is the highest diploma for students, and 27, 3% left school with this diploma in the year 1999. Compared to only 6, 1% that earned this diploma 1960 this is a positive trend for the German education system. Most students still leave school after ten years from the “Realschule”, 47, 4% did this in the year 1999. Those students are normally described as unproblematic for the job market and most of them can get successfully integrated. The “Hauptschule”, generally the school with the lowest educationally level, often gets criticized in the media in Germany. Students are often not qualified enough for the job market, employers complain about the standards this students often have in math or German. (Fischermann and Rudzio, 2006). 27, 0% of all students only receive this diploma in the end of their school career, which is already a bad start into the working life. Even worse is the situation for the 9, 3% that leave school without any qualification. When those two last numbers get combined, it can be concluded that over one/third of all students leave school without a diploma that is seen as the minimum requirement in order to find a qualified job.
Summary of Chapters
1. Abstract: Provides an overview of the challenges faced by low-skilled workers in the EU and introduces the research question regarding the potential of an earned income tax.
2. Unemployment in Germany-Statistic: Analyzes the high unemployment rates in Germany, the specific difficulties of low-skilled workers, and the impact of the Hartz IV reform.
3. Unemployment in Great Britain: Examines the British approach to labor market flexibility and the effectiveness of in-work tax credits for low-wage earners.
4. European social policy: Discusses the limitations of EU-level social policy coordination and the challenges of implementing harmonized redistributive measures.
5. Conclusion: Summarizes the findings, concluding that while an earned income tax is a promising model, a direct EU-wide implementation remains unrealistic due to national sovereignty concerns.
Keywords
Unemployment, Low-skilled workers, Germany, Great Britain, Earned income tax, Labor market, Hartz IV, European social policy, Globalization, Social benefits, Work incentives, Education, Labour market integration, Lisbon strategy, Welfare to work.
Frequently Asked Questions
What is the central focus of this research?
The paper focuses on the persistent unemployment among low-skilled workers in Germany and investigates how the British approach to in-work incentives might offer a potential solution for the EU.
What are the primary thematic areas covered?
The core themes include structural labor market problems in Germany, the British "Working Family Tax Credit" system, social policy challenges within the EU, and the impact of globalization on low-skill labor demand.
What is the main research question?
The author asks why Great Britain has been more successful in integrating low-skilled workers into the labor market than Germany and evaluates if an earned income tax model is a viable strategy for the European Union.
Which scientific methods are utilized?
The study employs a comparative analysis of national labor market statistics and social policies, supplemented by an evaluation of historical political developments and economic literature.
What is covered in the main body of the paper?
The main body contrasts the German insurance-based welfare model with the British market-oriented approach, evaluates the efficacy of recent reforms like Hartz IV, and explores the theoretical arguments for and against EU-wide social policy harmonization.
Which keywords best characterize this work?
Key terms include unemployment, low-skilled workers, earned income tax, labor market integration, and European social policy.
How does the author evaluate the "Hartz IV" reforms in Germany?
The author views Hartz IV as a necessary attempt to reduce social welfare dependency and incentivize work, though noting that it faces criticism regarding its social impact and long-term effectiveness for the long-term unemployed.
Why does the author conclude that an EU-wide earned income tax is currently unrealistic?
The author argues that member states are unwilling to cede redistributive powers to the EU level, and that significant legal and constitutional hurdles in various countries prevent a unified implementation at this stage.
- Quote paper
- Daniel Schmidt (Author), 2007, Unemployment of low-skill workers in Germany - Would an earned income tax implemented on the EU level help to strengthen their position?, Munich, GRIN Verlag, https://www.grin.com/document/91673
