The term German model is most often used in economics to describe post-World War II West Germany's means of using (according to University College London Professor Wendy Carlin) innovative industrial relations, vocational training, and closer relationships between the financial and industrial sectors to cultivate economic prosperity. The two key components of the German model is a national system for certifying industrial and artisan skills, as well as full union participation in the oversight of plant-based vocation training.
The German model of collective bargaining differs from the model common in other European countries and the United States. In Germany, unions and employer associations bargain at the industry-region level. In contrast to tripartite corporatist systems, the German government is not involved in the negotiations. These large-scale agreements have broad coverage and lead to considerable standardization in wages and employment conditions across the country. Some bargaining occurs at the firm level.
History
In 1869, legislation liberalized apprenticeship training, removing restrictions on who could take on apprentices. In 1881, 1884 and 1887, legislation tightened the restrictions.
A law passed in 1897, the Handicraft Protection Law, stabilized a plant-based apprenticeship system in German industry. The law set limits on the number of apprentices a firm could take on and introduced a monitoring system for the quality of training. According to Kathleen Thelen, this law played an essential role in cementing what would become the German model. The 1897 law was the result of bargaining between the state and the artisanal sector, which had a supportive relationship. Organized labor had a minimal impact on the legislation and the social democrats opposed the legislation due to suspicion of the traditional artisanal sector. Thelen writes that the impetus for the legislation was "deeply political and mostly illiberal."
Over time, the social democrats were incentivized not to dismantle the system established by the law, as labor unions became increasingly filled with skilled workers trained under the apprenticeship system. In the Weimar Republic, German unions had become advocates of the in-plant training system. Gradual changes were made to the vocational training system in the 20th century.
Industrial relations
Under the German model, unions are organized at the industry level and co-exist with works councils at both the plant and company levels. These unions negotiate wage determination with employers' associations. The strength of this setup is the cooperation among unions and management councils. This is unique among Western countries, which have been marked by either substantial weakening of union powers (such as in the United States and United Kingdom since the 1980s), or consistent union conflict (such as in France and Italy, where unions have remained strong).
Consensus model
As in relations between unions and employers, the German model also seeks to harmonize relations between regulatory bodies and affected parties, as well as between individual companies to prevent ruinous competition within the scope of applicable antitrust law. Considered an outgrowth of the non-confrontational culture of postwar Germany, finding a common denominator was often the main goal in such relationships.
Vocational education and training
The system of vocational education is perhaps the most important component of the German model, and is still very prevalent in the German educational system. In Germany, there is a much heavier emphasis on apprenticeships for skilled positions, taught by expert worker-instructors. It has been made possible through long-term politics, focusing on establishing stronger links between the dual vocational education and training system and institutes of higher education, on improving integration into vocational training through basic skills and permeability and on establishing national coverage of branch-specific regional initial and continuing training centres.
As such, there is a lower percentage of university students in Germany when compared to other Western countries, and a much lower percentage of persons entering the workforce for on-the-job training.
Vocational training is required for a large number of occupations. At the end of vocational training, a highly regarded certification qualification is awarded that is valid for a range of over 400 occupations. This is in stark difference to other European countries, where the number of controlled occupations is much smaller .