German Economy
The ways to a strong economy
The German economy is considered the powerhouse of Europe. Even though it was anticipated to be a dead man amongst Europe’s big players like France in the early 2000s, it has become a rising Star, nowadays. This development started to develop with the big reforms that took place in the early 2000s. Back then Schröder’s infamous “Agenda 2010” was nothing more than a phantasm to bring Germany back to the days of former glory. But over this decade these harsh reforms turned the Economy into the one we know today.The “Agenda 2010” was basically a reform catalogue for the German welfare system and the labor market to make the country’s economy more competitive. Especially the welfare system was known to not create any incentives for unemployed people to go working because it would cover the needs of unemployed too well. Due to this, the idea to cut the welfare money, especially for long term unemployed workers arose. The general idea of saving money with the Agenda 2010 was not just a side effect it was more or less unavoidable because of the Treaty of Lisbon that forced Germany to save money.
The Job Market
The Job Market in Germany is a prime example of a widely focused structure for the demand and supply of workforce. Oriented towards a pan-European labor supply, the general architecture of the job market in Germany relies heavily on certain core features, of which most of them are the result of a thorough evolution of the job market throughout the last 250 years. Due to historical developments, economic urgencies and also the socio-economic agendas of the various political parties that have governed Germany during that time, a strongly regulated labor market in favor of the employees has emerged.A vast majority of rules and regulations serve as the judicial background for most of the blue- and white-collar jobs. This is where the traditionally powerful labor unions exert their great influence on the job market in categories like wages, working times and general working conditions. To foreigners, the power of labor unions in Germany may sometimes look overwhelming and in some instances even malevolent to the general well being of the economy.
Germany and the service sector
The service sector is of fundamental importance to Germany’s economy. This sector deploys work for almost 75% of Germany’s citizens, and by this simple fact, has a huge impact on the economy of the country and its economic power.It’s also, not very surprisingly, the biggest sector with a share of almost 70% of the GDP. But what makes Germany such an interesting location for the service sector and what are the locational advantages that make this sector so
overwhelmingly successful?
Locational advantages
All of the big consulting companies like Ernst & Young, Deloitte or Kearney ranked Germany as the country with the best locational advantages in Europe. Germany would even be one of the Top 10 countries in the world, according
to those studies. These facts are not just random figures, they are caused by fundamental locational advantages of Germany as a country. A major advantage is of course the excellent location of the country itself.
A historic backround of the Germany economy
Things didn’t look too good for the German economy at the end of World War II after the unconditional surrender. The nation was frustrated and exhausted, after a war that stretched the limits of the people. Almost everything lay in ashes, especially the residential properties, which had to be recreated. It can be considered a lucky strike, that 80 to 85% of the production capacity had not been bombed by the Ally winners of the war.Luckily they kept in mind, that there had to be a process of recreation in Germany after the war.These production capacities were the key to a rapid restoration of the German economy and lead to the so called “Wirtschaftswunder” in the 50s. This term describes the swift economic boom after the war and is still a myth in Germany nowadays. Between 1952 and 1960 the GNP rose by 80% and the investment rate by 120%. But this huge success was not only due to the, often mentioned, German traits like the work mania.