Discussion Papers

Dieter Elixmann, Alfons Keuter, Bernd Meyer

Beschäftigungseffekte von Privatisierung und Liberalisierung im Telekommunikationsmarkt
Nr. 178 / November 1997


The German telecommunications (TC) services market currently undergoes fundamental changes. The market has been gradually liberalized in fringe areas and will be completely opened up to competition on January 1st, 1998. In addition, Deutsche Telekom AG (DT AG) has been privatized in late 1996. WIK has carried out empirical research on the employment effects of the evolution of the German TC sector in cooperation with the University of Osnabrück. The focus of this project was to estimate the short and long run effects of two main future developments reflecting the new structure in the TC sector: (1) The new entrants in the market will invest in goods and services. DT AG is reacting on growing competition and loss of market shares as well as requirements connected with its privatisation by decreasing its annual investment levels and by altering the structure of investments. (2) The new entrants in the market will demand intermediate goods and DT AG is likely to change the composition and level of its current demand for intermediate goods. In addition, the prices in the TC sector will decrease.

Focussing on the effects of changes in investment demand of the players in the German TC market alone we calculate positive effects for employment up to the year 2000. However, we conclude overall negative employment effects after the turn of the century. They can be of an order of magnitude of -200,000. Thus, the gains in employment due to the investments of new competitors will most likely not outweigh the losses in employment caused by DT AG´s investment policy. Focussing on changes of demand for intermediate inputs and prices in the TC sector, the overall employment effect is obviously positive. It may reach a level of above +200,000 until the year 2005.

All exogeneous changes taken together, the overall macroeconomic employment effects are clearly positive in the short and medium term (+87,000), i.e. before the end of the century. However, it is likely, that they will turn negative thereafter. It is reasonable to assume an order of magnitude of -76,000. Liberalisation and privatisation in the German TC market lead to the generation of a great number of new jobs, in the sector itself as well as in other areas of the economy. Only after the new entrants in the TC market reduce their annual investments from high start-up levels, and provided DT AG keeps running annual investments on a significant lower level than today, negative direct and indirect employment effects will dominate the overall development. The sectoral composition of the employment effects indicates that besides inventory goods producing sectors (electronics, machinery) primarily the State with its public services as well as the private services sectors is affected by the changes in the economy.

The results of our simulations are based on fairly cautious assumptions concerning the magnitude of the direct demand and price effects which are connected with privatisation and liberalisation. Thus, if the demand reductions of DT AG will be less in the future, if the growth of the intermediate demand of the competitors and their investment outlays will be higher and/or if the price reductions in the TC sector will be more drastic, employment gains for the TC sector as well as for the entire economy will in all likelihood weaken the long-run negative employment results of our simulations.

Only German language version available.

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