Daniel Schmidt 
Unemployment of low-skill workers in Germany – Would an earned income tax implemented on the EU level help to strengthen their position? [PDF ebook] 

Seminar paper from the year 2007 in the subject Politics – Topic: Globalization, Political Economics, grade: 1, 0, University of Twente (Political Institute ), course: European Economic Governance, language: English, abstract: Unemployment is a problem for every member state in the EU, even though the numbers of unemployed people vary from country to country. Especially for the countries which are grouped into the continental system (France or Germany) the problem is severe. On the other hand other countries have improved their markets and now have less unemployment than in the 1980th, for example Great Britain or Spain.
However, in every country one group is seen as especially problematic and those are the low skilled workers. Persons without good education or professional training run a high risk of becoming unemployed. Compared to academics in Germany their number unemployment is four times as high in this group. This is partly due to the fact that the global competition has become stronger during the last years. Since the wages in other countries are lower this leads to cheaper production cost for the companies in those places. Especially for labour intensive industries this is a problem, and those industries normally provide the jobs for low skill workers. Thus all countries have taken measures to integrate this group better into the world market.
The leading question for this paper is why Great Britain has been more successful in integrating this group in the work market than for example Germany. One program that will be introduced is an earned income tax. This means that low skill workers become additional money, for the case that they have a job that pays only little money. With this program the British government motivated people to take jobs, even though the hourly wage is not high. This program worked well and got extended in April 2003.
In the end of the paper the question will get discussed if the earned income tax would even be an option for the whole of Europe. Since companies act on a worldwide market, some employment problems extend the boarders of nation states. In order to answer this question, the actual politics in this field of the EU will shortly be described. Social policy was historically never one of the most harmonized fields. But with the Maastricht and especially with the Lisbon strategy member states agreed to certain measures in this field. The question is how far this arrangement go, and whether or not an earned income tax is realistic in the near future for low skill workers.