Globalisation and Downsizing in Germany

Special Issue

Abstract

In the 80’s, globalisation was much vaunted as offering the Western world a dazzling new array of business opportunities. In the 90’s, however, the negative impact on the labour market has become all too evident. A look at Germany’s labour statistics shows a frightening picture of massive job destruction in the wake of globalisation. As firms contend with heightened international competition and incomparably low wages in the former Eastern bloc and Asia, they have turned almost ubiquitously to cost-cutting through shedding labour inside Germany itself. Jobs either disappear altogether or are relocated. Through computerisation, strategic alliances, lean production and so on, the process of rationalisation and wage reduction proceeds at an alarming pace. In addition to the problems caused by globalisation, there are also serious issues with respect to German management, which are unquestionably major contributory factors to the country’s current difficulties, especially mass unemployment. The second part of the paper considers a variety of issues in this context including the rampant and socially destructive preoccupation with cost cutting and rationalisation, negative managerial behaviour and lack of innovation. If Germany is to prevent serious economic decline, the problems need to be tackled on several fronts simultaneously. Attitudinal changes on the part of both management and workers, a modified taxation regime, better public relations about Germany as an industrial location and various other strategies offer some hope to a country that is clearly undergoing a globalisation crisis. There are certainly some viable alternatives to downsizing and a look at the strategies used by other industrial countries gives further insight into positive solutions.