Financial Times, 11 December 2001


German work/life balance is too good to last


Germans enjoy perhaps the best working conditione in the world. But reform is slowly catching up with a system that also fosters long-term unemployment, says Emma Tucker

No one pretends that the heavy traffic clogging Berlin's roads at about midday on a Friday is anything other than an indication of the generous warm-up locals like to give their weekends.

Nonetheless, the results of an investigation by a group of journalists from the Berliner Morgenpost still came as a shock. The reporters made 50 phone calls with 50 different requests to 50 public servants at 11am on a Friday. Officially public servants finish work at midday on Fridays but already at 11am most calls went unanswered and when a phone was picked up it was usually to tell the caller to ring back on Monday.

The report underlined what one might call the "healthy" attitude towards work that prevails in Europe's economic powerhouse. The problem of balancing work and life may exercise the pockets of Frankfurt bankers or high-flying Munich public relations executives but it is not generally a stock topic at dinner parties. On the whole, people think they have got it right.

Given the conditions under which both public and private employees in Germany work, it would be worrying if they did not. Germans in employment work fewer hours a year than virtually all their counterparts in other European Union countries. Only in Sweden and the Netherlands are fewer annual hours worked than in Germany.

Jobs are highly secure, with employers reluctant to make people redundant because of the costs involved. When they do, workers are protected by generous social security provision. A study by the International Institute for Management Development in Switzerland concluded that Germany's labour market was the third most highly regulated when compared with Japan, the US and other countries in Europe.

As if this were not enough, a study into unpaid overtime by the Anglo- German Foundation for the Study of Industrial Society carried out by economists from the universities of Stirling and Hanover confirmed that not only do Germans work fewer paid hours but they also work fewer unpaid hours.

The study, which looked at the private and public sectors, found that unpaid overtime, when employees work beyond their agreed hours for no extra payment, has become an important economic phenomenon in the UK, where there are roughly as many unpaid overtime hours worked as there are paid overtime hours.

While the average British female works an extra 1 hr 20 mins a week unpaid, her German counterpart does only 12 minutes for no extra cash. For German men unpaid overtime averages about 36 minutes a week but for British men it is two hours.

Professor David Bell, a member of the department of economics at the University of Stirling and one of the report's authors, believes the results reflect the massive changes that have taken place in the UK labour market over the past 20 years.

"Flexibility has become part of British working life. That cultural change has happened in the UK and may well not have happened in Germany," he says. So what is it about the German set-up that allows workers to go home and help put the

children to bed while their British colleagues slog into the night for nothing?

The answer lies in Germany's faith in a system that has ensured economic and political stability since the second world war, as well as impressive levels of productivity. In spite of all those unpaid hours put in by British workers, productivity is still higher in Germany than in the UK. Figures from the UK Treasury that rank the UK against other countries on gross domestic product per worker put Germany at 110 against the UK's 100.

Employers, however, argue that the system is hugely costly, excludes thousands of people from the workplace and will eventually erode Germany's productivity advantage.

German unemployment - 7.9 per cent - is among the highest in Europe. Part-time work has increased only marginally over the past five years and women tend to drop out of the jobs market once they have children.

But those within the system have good reason to defend it. The hours are orderly and civilised and work is devoid of the stress that comes with US-style job insecurity. This, they argue, is a better recipe for social stability than America's. Going down the path of greater flexibility would surely disrupt the traditional German way of life - from its prohibition of Sunday shopping to its regulated hours, which in effect allow even white-collar staff to clock in and clock out.

That the structure lumbers Germany with a permanent and large rump of unemployed people who will find it hard to enter the privileged world of the employed is glossed over. So great is the loyalty to Germany's social cushioning - the product of a postwar determination to prevent the creation of an underclass and the conditions for political extremism - that the connection between market liberalisation and job creation is rarely admitted.

In fact no one in Germany, not even the lone voices among the employers, are advocating that the US or the UK should be re-created on German soil. Reform has to be German-style: slow, laborious and, above all, politically acceptable.

This consensual approach explains why change in response to global pressures is so remarkably unhurried here, particularly in the service sector. Going out of your way to please a customer is still not the German way, a tendency that is perhaps exacerbated in Berlin and the east, where traces of communist rigidity is are still to be found within the service sector. Making that extra bit of effort might involve a bit of unpaid overtime and, as the Anglo-German Foundation study found, that is not an acceptable prospect for many German workers.

But this also reflects the lack of competition in services, not just in Germany but throughout Europe, where cross-border obstacles to competition have allowed national markets to resist change. In the highly competitive manufacturing sector, German companies bend over backwards for the customer.




© 2001 Financial Times group