ABSTRACT
This chapter argues that the traditional defence of the European social model may be losing credibility precisely because of the difficulties facing the German economy. It focuses on the pressures placed on Germany by new emerging flexible patterns of production encapsulated in the term 'lean production'. The chapter outlines the German system of labour market co-ordination. It explains why this system is seen to combine economic efficiency and social equity. Over the years a wide range of influences has been responsible for the impressive performance of the German economy. The symbiosis between the productive system of many German companies and the institutional structure of the labour market, has locked the country into a high skills, high quality economic trajectory. The German model creates a particular form of economic citizenship — the rights and obligations outside the sphere of individual contracts and market exchange that facilitate the incorporation of people into economic life.
