Three years ago a text was published that sounded a little bit like class struggle. Its author complained, that the buyin' power of the proletariat's gone down,” that money's gettin' shallow and weak,” and that they say low wages are a reality If we want to compete abroad.”

You may not believe it, but these lines are from Bob Dylan. He wrote a song called Workingman’s Blues #2”, which demonstrates clearly that workers face the same troubles all around the globe. These words echo changes in today’s labor markets which seem to be more universal than one might at first suspect. Workers and their families face common challenges in all industrialized countries. They have done so for a couple of decades and especially since the financial crisis has begun to impact labor markets.

The question is: How do we deal with them? Are we able to develop policies to help working families to stay on the job, to manage their children and family life and to find even something like fulfillment in what they do? That's no easy task in times of global competition, rising unemployment, and diminishing wages.

But I am confident that it is possible. And I feel support from the spirit so evident here in Washington. To be guest in a country that has the pursuit of happiness guaranteed in writing to all its citizens is an amazing experience. I sense a remarkably optimistic willingness and also a strong ability to cope with the consequences of the current economic crisis. I just met Secretary Solis and we have agreed to cooperate on a number of issues in the international context. I am sure we will be able to make progress.

You invited me to offer some words about how my country's social market economy has fared since the founding of Federal Republic of Germany sixty years ago and how it will adapt to future challenges. I will focus on the issues arising from the current crisis. But I also want to take the opportunity to emphasize the tremendous help the United States provided us. With your assistance we were able to restore a social model of economic growth that reaches far back into the 19th century and has been the base for Germany's Wirtschaftswunder ever since.

In the current crisis, this model of a social market economy is once again proving its strength and its stability. It will help us to prevent severe social developments and to recover quickly from recession. I am in close and constant contact with unions and employers. We discuss every step we take and try to deal with the current situation in a spirit of social partnership.

There are a lot of different models around the globe describing how to achieve social justice. Each of these models depends on its own values and systemic configurations. It cannot simply be altered into a different model. Whoever has to deal with social policies also has to deal with a strong path dependency. Of course, this constrains the national debate, but it also relaxes the international discussion at least among the industrialized countries. Everybody knows that he is on his own and has to find his or her own solutions depending on the national path.

 
In Germany, the companies pay regular fees into the insurance system but they have to carry much smaller obligations on the company scale. This makes them compatible. The fact that our model reliefs the companies from costs for pensions and health insurances is a big advantage in the current crisis.

At the moment our main concern is to help the companies hold on to their workers. To do so we make use of an instrument called short-time allowance.” By this means the companies can flexibly reduce the working time and of course the salary of their employees. Unemployment insurance contributes two-thirds of the overall earnings then lost to the workers. They have less, but can keep their jobs. The companies retain their highly skilled workers and are ready for take off when the crisis is over. And government saves money because this instrument is still cheaper than unemployment.

Short-time allowance is a wager. It relies on the assumption that the crisis will end sometime in the year 2010. I am still quite optimistic that this will be the case.

Social market economy aims at fostering an individual feeling of security, assuring people that help is there if they need it. This reliability in the social state is a resource providing more general trust in the future. Our tradition of social partnership adds to this trust. Unions and employers negotiate industry wide collective-bargaining agreements dealing not only with wages but with all aspects of the working conditions. The majority of our employees benefits from these agreements. Work councils in every company with more than five employees make sure that co-determination

There is no sense of German Angst in the current situation. There is rather a growing feeling of readiness to be there when the worldwide economic downtrend comes to a halt.

But social market economy means more than social insurances. It also means social frameworks and mechanisms capable of balancing social and economic necessities fairly. We know how to work hard and how to make sacrifices in order to be competitive in the global market. But we like to play by agreed rules which provide fairness and justice.

I am convinced that the differences between the United States and Germany in all of these fields are much smaller than many observers make them out to be. Especially the idea that we need a reliable order for our markets is one that we can agree on in principle. Of course, we must discuss in detail what that order should look like. But these are the things friends ought to discuss. And I am glad, that we are able to do that.

Because the challenges we face are roughly the same. Our workers and their families want to live a happy life in relative security. They are looking for assurances
•    that their jobs will not be relocated,
•    that they can live from what they earn,
•    that they do not have to rely on the mercy of their employer,
•    and that their hard work will pay off for them and their families.

We can help them to accomplish that. If Germany and the United States work together we can meet the expectations of our working families. And we can build a prosperous future.
Thank you!

Hier finden Sie weitere Informationen zur Congressional Study Group on Germany.