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Germany wants more than economic envy


Germany

Germany wants more than economic envy

When Germany was staggered by the costs of east-west reunification after 1990, many saw it as the so-called ‘sick man of Europe’.

Observers surmise that the same term might apply if Germany were to fuse with Greece today.

Yet Germany rebounded, and established itself as the world’s fourth-strongest economy.

Many look to it as an exemplar, with numerous models to follow.

Its economic competitiveness is due to the capacity of its companies to conquer external markets and then to keep their place there.

German exports have doubled in the space of ten years, to a value of well over one trillion euros.

A persistent first place exports rival with the United States, the Germans have seen China move ahead of them. They want others to keep buying their products.

Among the industrial sectors in which high quality exports from Germany have circled the globe, some of the most notable are the automotive, engineering, electro-mechanical and renewable energy sectors. Resilience in hard economic times has been attributed to unions’ dialogue with business and companies’ far-reaching investment in research and development.

German labour costs are among the lowest in the euro zone, and have been limited for ten years.

While unemployment rose in other countries, it has fallen in Germany, from 12 percent in 2005 to less than seven percent in 2012.

It was the result of concerted policies to get people back into work, to reduce state spending. Part of Germany’s “job miracle” is its lack of a uniform statutory minimum wage. The low wage sector grew three times as fast as other employment in the five years to 2010.

A fifth of workers earn less than ten euros per hour in Germany.

Pay can go well below one euro an hour. The average has dropped by more than four percent in ten years, explaining why Germans have not been spending much more than in the past.

The model’s biggest weakness is its ageing population. This has retracted by half a percent in a decade. The birth rate is 1.4 babies per woman of child-bearing age. One in five Germans is over age 65. By 2060 it could be one in three.

This is starting to affect the labour market. Although a lot of seniors continue to work, in spite of pension reforms that came in this year Germany needs to prepare for a loss of five million workers in the next 15 years. Germany wants more manpower.

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