Liberalisation Only at the Margins? The Growth of Contingent Work in German Core Manufacturing Sectors

This paper investigates the growth of contingent work in German core manufacturing sectors. The analysis contributes to debates about the continuing relevance of “specific” skills vs. the role of legal and negotiated employment protection for preventing the expansion of contingent work. The Varieties of Capitalism and the dualisation literatures contend that employers in the core of the German coordinated economy still have a sustained interest in retaining workers with industry-specific skills, which are traditionally required for the manufacturing production (Hall and Soskice 2001, Hassel 2014). Other scholars argue that strong industrial relations institutions are critical for maintaining stable employment also in skilled positions (Streeck 1991, Marsden 2010), particularly because industry-specific skills do not necessarily correspond to complex tasks requiring a stable workforce (Jürgens 2004). The former set of arguments expects the “complementarity” between specific skills and stable employment to remain stable despite eroding negotiated and legal employment protection; in contrast, the latter literature strand expects the casualisation of work to also proceed in the critical case of  German core manufacturing sectors.

The analysis relies on quantitative and qualitative data. The quantitative analysis is based on five workers’ surveys from the German Federal Institute of Vocational Training and Education conducted between 1986 and 2012. The qualitative evidence is used to illustrate the causal mechanisms underlying the relationship between skills, work organisation and temporary employment. It relies on interviews with human resource managers and workers’ representatives in German automotive and machine tool plants between 2010 and 2013.

Findings confirm some of the expectations of the dualisation literature as contingent contracts are more common among workers who lack industry-specific vocational training, and the rate of contingent workers among this group relative to those with specific skills has increased over time. However, the paper also finds that the jobs held by core skilled workers are increasingly vulnerable to casualisation due to the routine nature of work and labour market deregulation. These findings are compatible with the literature focusing on the role of industrial relations and work organisation in supporting the linkage between skills and employment stability. As the (increasing) levels of job routine in core manufacturing sectors facilitate the employment of temporary workers, the role of industrial relations is crucial for ensuring stable employment: While works councils still manage to advance skilled workers along the career ladder, labour market deregulation has eroded their ability to control external hiring and the transition of trainees to permanent employment.

The contribution of this paper is twofold. First, the paper argues that the traditional “complementarity” between specific skills and stable employment has been overestimated in the literature as employers can use different strategies to bypass it once the negotiated and legislative employment protections have been weakened. Second, it provides new evidence based on individual-level data regarding how the liberalisation of the employment relationship has affected the workforce in core manufacturing companies of the coordinated economy par excellence.