Dissertation_Paula Aleksandrowicz_12 ... - Jacobs University

3.2.2. Overview of Changes in Labour Market Laws
The introduction of pension deductions, the raising of retirement ages and restricting
access to disability pensions is one way to tackle the issue of early exit. Another one is to
modify the levers of labour market policy which, on the one hand, regulate the access to the
unemployment pathway and, on the other hand, mobilise financial resources in order to
retain older workers on the labour market.
Labour market policy in Germany has developed along similar routes as pension policy.
Till the middle of the nineties, there existed a joint consent among the policy-makers, social
partners and the individual workers that early retirement was a tool to combat labour market
problems, especially among younger people. When older workers were considered as a
target group, it was with the goal to fight (long-term) unemployment. Older workers “have
been regarded more as a target group for cost-reduction initiatives and less as an important
target group for active labour market policies” till a “change in paradigm concerning older
workers´ issues” occurred at the end of the nineties prompted by the concern about the
looming labour and skill shortage and the pressure on public sector funding (Naegele 2002:
223). That paradigmatic change was the shift of the focus to active labour market policies
accompanied with the curtailment of early exit options.
In the following, I will first expound passive labour market policy, which constituted an
early exit pathway via unemployment, and then turn to activating measures as an element of
the trend reversal and the turn towards longer working lives. The last paragraphs will deal
with labour market laws which have an impact on the employment relationship and may
constitute a barrier to re-employment, like seniority rules and protection against dismissals.
The unemployment protection in Germany grants an earnings-related unemployment
benefit (Arbeitslosengeld I, in the following: unemployment benefit or AL-Geld I) – to
persons who had been gainfully employed for at least 12 months – and a means-tested lumpsum
unemployment allowance (AL-Geld II) after exhaustion of the maximum period of
receipt of the first one. Between 1985 and 1987, laws were issued which, as a final result,
extended the maximum period of receipt of the unemployment benefit for persons aged 54
and older to 32 months (before, there was a uniform maximum eligibility period of 12
months). Moreover, older workers from the age of 58 on were since 1986 released from the
obligation to actively seek work (´facilitated receipt of unemployment benefit´ according to
§428 of Social Code III). In 1998, 20 per cent of all unemployed West Germans aged 58-64
52