This paper summarises the institutional arrangements and prerequisites for
a new social partnership, necessary for the successful completion of labour
market reform in western Germany. It does this by drawing on key policies
and proposals highlighted and explored in the papers of this special issue.
The paper elaborates further on these issues by outlining the importance o
f the labour market and its institutions in the German social market econom
y before turning to the case for reform. The paper addresses both micro and
macroeconomic themes, including international experiences of labour market
reform, employment and social policies, insider-outsider and institutional
ly determined unemployment, the German system of collective bargaining and
the importance of tripartite corporatist agreements. The paper concludes th
at reform in the German labour market should proceed through rather than ag
ainst the existing institutions of social partnership, possibly with a new
role for government in strengthening incentives for both unions and employe
rs to act in a socially responsible way.