Speakers: Maria Rauch and Michaela Pichlbauer

Organisation: Equalmünchen GmbH, SIM – Sozialwissenschaftliches Institut München

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“MünchenKompetent” as an instrument of anticipation and change

1. Rationale for the project

The "MünchenKompetent" development partnership addresses the key issues of the labour market of a big city. Global competition, which Munich is faced with, presents both enterprises and municipal society as a whole with a major challenge. In Munich, economic structural change is characterised by its classic traits: growing international interdependence of economic relations, decline of industrial production, expansion of the service-oriented society, formation of new economic systems and ways of life, erosion of standard employment relationships, and new forms of employment. This leads to high demands on the social, organisational and communication competencies of enterprises and employees but also of those who are outside the employment system. Human capital (expertise, education, experience) will increase in importance as a key competitive factor. While it is true that the necessity of life-long learning in one's profession is uncontested, it has hardly been reflected so far in any systematic and well-coordinated further training programmes offered by public education institutes or the corresponding structures and institutions.

Despite the reform efforts in the labour market, Munich has so far neither succeeded in cushioning the economic slump nor in containing growing unemployment effectively. The upswing of the mid-90s with the growth impulse provided by the web economy had but only a few sustained effects on the labour market. Even if the situation in the Munich labour market may still be described as favourable in comparison to other cities in the Federal Republic of Germany, hard-core long-term unemployment has grown continuously for years. At the same time, Munich alone lost circa 20,000 jobs subject to compulsory social insurance in the last few years. The concentration of highly qualified employees in the industrial and services sectors created a highly qualified regional labour market. The Munich labour market is, however, also characterised by mismatch issues. The number of vacancies that cannot be filled by the local labour force is growing. The relatively positive data of the Munich region hide contradictory trends. On the one hand, the growth segments show a demand for labour, which can only be met by a further influx of those who offer the requisite skills. On the other hand there is a migration balance that is characterised by large-scale differences as regards the level of education and training of Germans and foreigners in Munich, which extremely impedes the long-term integration above all in the primary labour market. In the year 2000, for instance, almost half of the migrants had not completed their professional training (Germans: 15.7%). To a disproportionate extent, young migrants in particular often fail to be integrated in the labour market, and the members of this group resort to the Agentur für Arbeit (the German employment agency) with above-average frequency.

Due to structural change, a large number of jobs are shed. In relative terms, classic industrial value addition decreases in importance over company-related, distributive, social and personnel services. According to forecasts, the German industry will have shed another 1.2m production jobs by 2020. This concerns in particular the producing sector, the construction industry and the traditional services sector (logistics) in contrast to company-related services. Another area of stagnation is the public sector. In contrast, growth sectors that are capable of absorbing labour include the personnel and company-related services and the R&D sectors. The sectors, however, turn out to be latently impermeable as regards employment since there is movement within these sectors but hardly any transfer into these sectors. This means that employees, in particular older ones and those with limited capabilities, are recruited ever less frequently for jobs in the labour market even if they offer the right skill set. The demand for well and highly qualified wage and salary earners will continue to be strong and even increase and will be covered by migrants who offer the requisite skills if there is a lack of local potential. Persons who offer only few skills or not those that are currently required may, however, turn out the relative losers of a policy of progressive liberalisation in highly developed industrialised countries. This involves the risk of growing social inequality and the polarisation of society, which present a major challenge for urban society. Incentives for investment both in real and in human capital are called for.

The MünchenKompetent DP has drafted a project concept in order to respond to this analysis of the Munich labour market focussed on the following subjects:

1) Setting up new businesses

This is an efficient tool to create jobs. This tool should in particular be used for women. Technological developments and microelectronics in particular allow companies in many occupational fields to outsource jobs to self-employed women and men, for example in the media world. Nowadays, women often find it easier to opt for self-employment due to the fact that many professions in the services industry do not require large up-front investment in the start-up phase of their business. Apart from the drawbacks, such as social security issues, self-employment offers an opportunity for women to ensure a flexible integration in gainful employment and thus the opportunity to enhance the compatibility of occupation and family. Within a time frame of 10 years, the number of self-employed women in Bavaria increased from c. 150,000 to 185,000. Nevertheless, self-employment continues to be a male domain even today. 14.8 % of all gainfully employed men in Bavaria are self-employed whereas this percentage is only at around 7 % for women.

In order to raise the proportion of women amongst the self-employed, it is necessary to remove barriers for business start-ups and to offer customised coaching in particular in order to increase the potential for women to set up new businesses.

2) Life-long Learning

Living and working in a world of ever stronger change goes hand in hand with constantly new requirements in one's profession, social environment and private life. Life-long learning has therefore turned into one of the key factors for sustained economic and societal development. The knowledge society does not begin at the universities. A workable concept for life-long learning is designed to encourage the readiness to undergo training of all social groups as early and constantly as possible, and to foster and safeguard employment capability in a sustainable manner on the basis of participation in the training offerings made available. On the one hand, such a strategy has to address groups that are at a disadvantage in the Munich labour market, such as the (long-term) unemployed, unemployed women, women returners, migrants, young and elderly people, who make up the local pool of human potential. The focus is on the requirements of Munich's small and medium-sized companies, who are amongst the job creation engines in the region and could recruit a considerable percentage of their staff from this pool.

3)Problems of organizational and personnel development in companies

The problems experienced by small and medium-sized companies should be addressed by new forms of strategic alliances and network cooperations. The individual small and medium-sized companies as a rule operate as insulated individual players in the market, which places them in an environment of fierce competition against large corporations and high market risks. SMEs often hesitate to use opportunities for expansion (which might be translated into creating new jobs) and to hire new staff, which also means that the potential for personnel development is used to a smaller extent. At the same time, a large percentage of jobs within these companies are exposed to a higher structural risk due to the termination of business – be it because the company is no longer able to survive in the market environment or because it has to be closed down due to the lack of a successor to take over the business. Companies that team up in networks benefit from the improved transfer of information and synergy effects as regards the solution of HR issues.

4) Cooperation Schools – Working world

The failure to fill training positions that have been set up or made available is considered to be a special problem of personnel recruitment. This results from the frequent failure to transfer young people, in particular those with bad marks, to employment. A project which is designed to offer preventive action is to improve coordination and cooperation between the parties involved (school/companies/young people).

2. General objective in terms of labour market policy:

In the past 20 years, Munich has gained a great deal of practical experience in the area of local labour market policy. So far, Munich's local labour market policy, on the one hand, has addressed specific target groups who find it hard to integrate in the primary labour market and, on the other hand, has offered training programmes to those companies and employees that are particularly affected by structural change. Restructuring within the framework of Hartz I to IV requires new approaches for local labour market policy. The development of strategies for improving the employment capability of the labour force and the adaptability of employees and companies is defined as the objective for Munich's local labour market policy.

3. Organisational Development and networking

As said before the "Organisational development in companies“ project within MünchenKompetent" DPdeveloped several networks between small and medium-sized companies and tested whether they are suitable as a local labour market instrument.One of these networks addressed to small organic food shops. Although Munich boasts one of the largest health food markets in Germany, this sector faces many structural problems. The successful groundwork laid by organic food pioneers has led to a flourishing organic food industry. Rapidly growing markets display a momentum that quickly results in size- and structure-related competitive disadvantages for smaller-scale market participants, however, and there is the danger of "small ones" being crowded out of the market altogether. It is therefore not only a matter of the negative economic effects of such dynamic developments (homogenisation of market participants, the formation of oligopolies, the crowding-out of innovative market participants) but, from a community perspective, also a matter of the resulting job losses, the loss of competence in food and health issues offered by such stores, and the loss of social integration so typical of these small stores in urban neighbourhoods.

The network we developed contributed to the growth of the individual stores as well as to the transfer of experience, cooperation and exploiting synergies in an entire local sector. Guided by experts, the participants from the organic food shops entered a common learning and development process to ready themselves for potential cooperation in line with requirements and thus strengthened their market situation. The project was carried out in close cooperation with the Agenda 21 office of the health and environment department of the City of Munich. Within the framework of the "BioStadt München" ("Organic Munich") initiative, the objective is to network Munich-based projects and activities that promote the distribution and use of organic food.

The cooperation in the network covered the following topics:

analysis of the economic potential and strategic budgetary planning
free customer survey, tailored to each individual store (the individual benefit was linked to the specific experience of added value through cooperation)
better terms and conditions offered by wholesalers due to coordinated demand

Reduced costs due to shared services, for example accounting
A united front for small shops vis-à-vis health food chains and the organic product portfolio offered by traditional food retailers
Exchange of information on common problems, such as customer store cards, quality of suppliers...
Teaming up to increase visibility, for example by exhibiting at events, mounting advertising campaigns, etc.
Barter relationships amongst the participants

So by not only anticipating current changes in the environment but also by creating common strategies for dealing with these changes the small shops are able to take an active part in the restructuring of a whole branch and to take care for the related jobs.