what has changed in Germany? – .

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what has changed in Germany? – .


During her 16 years as German Chancellor, Angela Merkel has seen four US and French presidents, five British prime ministers, and nine Italian and Japanese prime ministers. Sometimes described as the most powerful woman in the world, she has also presided over a national economic revival. Since 2005, Germany has gone from being a “sick man of Europe” to that of an economic power.

Perhaps most notable of all, Merkel, who enjoys an 80 percent popularity rating, has overseen dramatically expanded employment opportunities for women and the elderly, while welcoming over a million refugees.

Yet the legacy of Merkel leaving Germany after the September federal election is mixed. A common criticism is that although she has proven to be a skillful crisis manager, her three terms as Chancellor lacked vision and left Germany unprepared for a greener and more digitized world.

An economic “miracle”

Since 2005, German gross domestic product per capita has grown twice as fast as in the UK, Canada, Japan or France.

Today, Germans can revel in what Carsten Brzeski, head of macro research at ING, calls the “second Economic injuryr ”, or economic miracle. With unemployment close to its lowest level in two decades, nearly 70% of Germans say they are satisfied with their economic situation

Not all of this success is due to Merkel, however. Much of his groundwork was thrown in with reforms by his predecessor, Gerhard Schroeder, said Neville Hill, chief European economist at Credit Suisse. Germany’s second economic miracle happened “without Merkel’s government doing it.” . . anything, ”added Christian Odendahl, chief economist at the Center for European Reform.

In addition, the German manufacturing industry, which now accounts for 40% of all output in the eurozone, has benefited from the rise of China. Today, German dependence on China as an export market is particularly high in the euro area

Yet Merkel did not sit idly by as Germany got richer. Its response to the 2009 financial crisis, such as a cash-for-heap program that supported car sales, helped protect the economy. The same goes for his decision to inject billions of euros into the German Kurzarbeit program, a government unemployment insurance scheme.

A consequence of this has been Germany’s success in creating jobs.

Jobs, jobs and more jobs

Arguably the greatest achievement of the Merkel era has been an extraordinary rate of job creation, especially for women. Germany now has the highest female labor force participation rate of any G7 country, thanks to improved childcare services, said Oliver Rakau, chief German economist at the G7. Oxford Economics consulting firm.

Line graph of women aged 25-64,% showing that German female labor market participation is leading among all G7 countries

Equally remarkable, employment increased among immigrants. It took courage for Merkel to stick to her 2015 policy that brought and then integrated over a million refugees fleeing the war in Syria, Afghanistan and Iraq. As she once said, “we can do it”. Then she did.

Column chart of claimants in Europe, '000 showing Merkel opened Germany's doors to asylum seekers

The same is not true for the quality of employment. A high proportion of workers remain in low-paying jobs, with little improvement over the past two decades. Many female jobs also remain part-time, and only one company in the German Dax index has a female managing director.

Little debt, but not much vision or investment either

Despite the pandemic, Germany is now almost as rich as it has ever been. The public accounts are generally healthy with relatively low debt levels, in part thanks to the 2009 balanced budget law.

But, in the same way, while all seems to be going so well, “the German economic boat has not been rocked by a big vision,” said Katharina Utermöhl, senior economist at Allianz. Despite the growth and increase in employment, there has been little modernization. Critics add that low rates of public investment have left the country ill-prepared for the future.

Line graph of general government gross fixed capital formation, as a% of GDP showing that German public investment is lower than its peers

The country’s shift to renewables accelerated after the Fukushima nuclear reactor incident in 2011 and with Germany’s more recent plan to phase out coal-fired power by 2035. Despite this, the country lags behind its EU peers.

Its per capita greenhouse gas emissions are higher than EU averages, its share of energy from renewable sources is lower and CO2 emissions from new passenger cars are also higher.

Germany ranks poorly on many ecological measures Average CO2 emissions per km from new passenger cars Share of renewable energies in transport Greenhouse gases (tonnes per capita)

The same goes for Germany’s transition to the digital economy. Lack of investment has led to low broadband penetration, an urban-rural divide in connection speeds, and below average mobile broadband data usage.

Not all of these areas “have received the necessary attention,” said Odendahl. “Lack of investment was probably the biggest weakness in Merkel’s economic policy legacy,” Brzeski added.

EU digital economy and society sub-index bar chart, 2020 showing Germany lagging behind in many measures of digitization

Even before the pandemic, Germany needed around 450 billion euros in public investment to start decarbonising, improving communications, boosting education and strengthening infrastructure, which failed to contain the flooding this summer. Indeed, the need for more investment has become a rallying cry among some of the candidates vying to succeed Merkel.

“The Covid-19 crisis has put a magnifying glass on [Merkel’s] gaps that the new government will need to address to ensure the success of the green and digital transition, ”said Utermöhl.

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