ABSTRACT

In a standard definition, the so-called German model is described as an ‘institutionalized high wage economy combining high competitiveness in world markets with strong social cohesion and, in particular, low levels of inequality along a variety of dimensions’ (Streek, 1997: 2). In a similar way, Freeman (2000) describes this model as ‘Rhenish Capitalism’. There are several characteristics that belong to the German model. These characteristics include at least five dimensions:

1 education and training: the dual training system, long tenure and acquisition of firm-specific human capital;

2 labour relations: high union coverage, co-determination and social partnership, high importance of internal vs. external flexibility;

3 solidarity: moderate degrees of inequality in earnings and financial assets, a comprehensive social security network;

4 industrial structure: export orientation of the economy, relative strength of manufacturing;

5 infrastructure: efficient transport facilities, highly reliable legal system.