Germany has recovered quickly after the Lehman crisis. And even in the face of the continuing uncertainty due to the debt crisis, growth in this country is still somewhat stable. Since Germany is the best foreign customer of more than half of the EU states, such a development also helps our neighbours and partners in Europe. Already in the previous years, German imports from there rose considerably: for the years from 2007 to 2011, Germany ranked second among all EU states with regard to import growth. This proves that the criticism voiced occasionally is unjustified, according to which Germany is depicted as being unilaterally export-oriented and partially responsible for the current situation in some of the euro countries.
What is true about Germany, however: it’s a good example of the efficiency of structural economic reforms. Only ten years ago, we were considered as bringing up the rear in Europe – “The sick man of Europe” was the title in a renowned English-language magazine back then. In this difficult phase, we managed to draw the necessary conclusions from the economic stagnation during the early years of the new millennium and take partly painful countermeasures. The success factors were just as valid back then as they are today: Germany has a sound industrial foundation – the “old economy” is the “future economy”. The manufacturing trades contribute around 25 per cent to the economic performance, thus taking a leading position in comparison to other European countries. Producers, suppliers and service providers have been tightly interlinked for years and form the “Netzwerk Industrie” (industrial network). There is a balanced mixture of companies from the core industries and service providers such as research and development, consulting or market research. Their interaction keeps the healthy cycle of innovation, growth and employment going.
Through the recent years, companies have worked on their productivity and innovative power and invested in new products, services and processes, in new markets and new cooperation. Especially those industries with a strong presence in Germany, such as automotive and mechanical engineering, chemical and electronics, have made enormous efforts and have integrated new technologies again and again. As a result, the investments of companies in research and development rose an astonishing 40 per cent within ten years, reaching an estimated 50 billion euros in 2011. Even during the crisis in 2008/ 2009, businesses did not stint on their innovation expenditures. Today, the success in the world markets proves this strategy right. The positive attitude towards globalisation is also a key to success. Early on, the companies developed markets all over the world – and they are continuing to look around. Particularly in the dynamic growth regions of Asia, Latin America and Africa, new potential keeps growing, which the companies develop by implementing sales structures first and subsequently setting up production sites.
In Germany, we have a unique variety of companies which almost the entire world envies us for: there are large, successful stock companies, many committed small businesses and – compared to other countries – a wide range of medium-sized enterprises, many of which are family-owned. 90 per cent of all businesses in Germany are run by families; these businesses account for 60 per cent of all jobs. Among them are many “hidden champions” who are highly innovative and successful in the world markets. These companies in particular do not think in terms of quarterly reports, but rather take more of a long-term approach. The typical export-oriented medium-sized company on average is already active in 16 foreign markets. This attitude of “think global – act local” is unique in the world.
Politics has also supported these developments by providing favourable conditions, for example with regard to the employment market. The parties to the wage agreements have made an important contribution for a long time through their intelligent wage policies. By now, approximately one in two persons in Germany has a job – these are record numbers.
Does this mean that Germany has made it once and for all? Experience has shown: if you rest on your laurels, you’ll be left behind. The demographic development is my biggest concern. Even though the development has been known for years, no decisive measures have been taken. Soon we will be hit by the full force of the decline in population. Many companies are already having difficulties filling their vacancies with appropriately qualified candidates. Germany’s most important “raw material”, namely skilled and innovative professionals, is becoming scarce. Every one in three companies considers the shortage of skilled labour a risk for its business development, and already in the coming months at that. We – that is politics, economy and society – will jointly have to meet this challenge with smart ideas.
This encompasses not only a higher quality of school education, more further education, the increased employment of people at an advanced age and a better compatibility of career and family, but also more opportunities for people who have come or will continue to come to us from other countries.
Let’s look ahead: our European neighbours recently have begun to implement the reforms which have already made the Federal Republic of Germany strong. This means that our Euro partners will catch up in terms of competitiveness – maybe not overnight, but certainly in the medium run: Ireland has raised the pensionable age, Spain has adopted a debt brake. Italy has made its employment market more flexible, Portugal has done away with public holidays. These are only some of the most recent examples. The list of measures is long – and gets longer every day. This should spur us here in Germany to not sit back and take things easy.
The above-mentioned reforms are part of the fight against the sovereign debt crisis. None of us in Europe must reduce our efforts. With its course of simultaneously saving money and implementing reforms as well as with the agreement on the fiscal pact, Europe has taken the right path. We should continue to promote the measures with determination and not cause new insecurities by constantly coming up with new suggestions. In the medium to longer term, only one thing is important: regaining lost trust. The states of Europe will only succeed in this effort if they adopt a policy of authenticity – a policy where citizens are told truthfully what it will cost, a policy without new debt.
The author, who was born in Malaysia in 1965, earned a doctorate in business administration. In 1990, he entered the management of ALBA AG. He has been a member of the board of ALBA Group since 1993 and CEO since 2011. In March 2013, Dr. Eric Schweitzer became the president of the Association of German Chambers of Industry and Commerce (Deutscher Industrie- und Handelskammertag, DIHK)