Reshaping skills, industrial relations and social protection for the knowledge economy : evidence from Germany

Technological change has meant that university-educated workers have become crucial to the production strategies of ICT-intensive, high-end exporting firms in the knowledge economy. We argue that the centrality of high skills in manufacturing has weakened the traditional institutional complementarity between specific skills, regulated industrial relations, and generous social protection in coordinated market economies. In fact, the liberalization of industrial relations and social protection has been instrumental for firms to concentrate wages and benefits on increasingly important high-skilled workers. To test our alternative perspective, we leverage the critical case of German manufacturing. We find strong evidence in support of our argument through an analysis of descriptive data, elite interviews, and industry survey s and reports. Our paper provides important insights for the nascent CPE literature theorizing the adjustment of advanced capitalist economies to the knowledge economy