Labor Market Flexibilization and Low-Wage Employment in Germany, Austria and Switzerland: Between Transformative and Incremental Change?

The present paper concentrates on labor market flexibilization and growing low-wage employment in Germany, Austria and Switzerland. Besides time and country specific comparative analysis, we investigate what groups of people are confronted with particular risks of seeing their wages fall below the low-wage threshold using regression and decomposition techniques (data basis 1996-2013: GSOEP, EU-SILC, ECHP, SHP data).

We focus on these countries because they feature similar welfare arrangements and represent comparable logics of organization, stratification and societal integration, as they belong to the group of corporatist/etatist countries which show similar degrees of decommodification. They also show strong, historically grown economic and cultural ties, with a lively extent of mobility between their labor markets. But looking beneath the surface of those institutional similarities, one can observe proceeding differences over the past 15 years, as authors such as Trampusch (2010) and Haller (2015) have suggested. Whereas institutional change is characterized by a transformative pattern in Germany (i.e. simultaneous change across many institutional dimensions), institutional change has occurred in a self-preserving (incremental) manner in Austria and Switzerland (i.e. only in a few of these dimensions).

Our results show that the low-wage sectors have enlarged in all three countries. In Germany, this tendency has resulted in one of the highest low-wage rates across Europe. In turn, Austria has lost its exceptional position as a country with a weakly developed low-wage sector and Switzerland is placed between those cases. Moreover we can identify special risk groups facing growing low-wage risks over time (e.g. women, workers in lower occupational classes). Changes in the composition of the labor market have, in part, enhanced this trend (rising female employment), while counteracting it in other cases (rising highly qualified employment), In general, the changing composition of the labor market has cushioned a yet stronger increase in low-wage rates.