Employees need to accumulate wealth. In view of rising life expectancy figures, they need to insure themselves more effectively against personal risks. Against a backdrop of growing globalization, employees should also be able to benefit more from capital market trends. One way of achieving this is to give employees a stake in their company. A direct stake in a company is often combined with staff incentives and accompanied by increases in productivity. In times of cost pressure, structurally necessary wage reductions that are impossible to implement can be compensated for by giving staff a stake in the company’s productive capital. Investive wage agreements that run over a longer time frame and only compensate staff already employed at the company via a company participation scheme lower the wage costs of employing new staff. They therefore offer an incentive to create new jobs without placing existing staff at any disadvantage.

Refereed scientific monographs

Can Germany be Saved? The Malaise of the World’s First Welfare State, MIT Press: Cambridge, Mass., 2007, 356 pages. (Revised and updated translation of Ist Deutschland noch zu retten?); Chapter 9: “Rethinking the Welfare State: A Reform Program”. To Amazon.

Ifo Viewpoints

Ifo Viewpoint No. 51: Low Wages, Wage Subsidies and Investive Wages, Mar 4, 2004.

Ifo Viewpoint No. 11: The Dilemma of Globalisation, Mar 6, 2000.