Reforms in the new German labour market: a case for institutional corporatism?

This paper summarises the institutional arrangements and prerequisites for a new social partnership, necessary for the successful completion of labour market reform in western Germany. It does this by drawing on key policies and proposals highlighted and explored in the papers of this special issue. The paper elaborates further on these issues by outlining the importance of the labour market and its institutions in the German social market economy before turning to the case for reform. The paper addresses both micro and macroeconomic themes, including international experiences of labour market reform, employment and social policies, insider‐outsider and institutionally determined unemployment, the German system of collective bargaining and the importance of tripartite corporatist agreements. The paper concludes that reform in the German labour market should proceed through rather than against the existing institutions of social partnership, possibly with a new role for government in strengthening incentives for both unions and employers to act in a socially responsible way.