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The World has a combined challenge – not only one region, not only 1 country. All nations will need to cooperate more and more intensively than ever before to overcome this challenge.
Autumn 2021 will also be the end of an epoch with Angela Merkel being our German chancellor. She will remain to be the first woman as well as being the first “Eastern- German” chancellor. But what else will remain in the books of history?
Amongst many other emotional expectations we have had 16 prosperous years.
GDP per head Source: de.statista.com
The economy in none of the Eastern European countries had been developed better than the economy in Eastern Germany. Statistics have shown that GDP per head has nowhere in G7 grown faster during these 16 years of Merkel than in Germany. Reading local media, this seems to be amazing as in newspapers we learn every day for new, how lazy and how back-wooded we are!
In digitalization this really is truth!
Handelsblatt 27.08 21
Merkel had been chancellor, when Italy had 9 different prime ministers. Or the traditionally well-known football- club Hamburger SV (Uwe Seeler) had 24 different team coaches! However her “Christian Democratic Union” (CDU/CSU) reduced their influence from former more than 40% to currently (polls) 23%. It well may be that we will not have a parliament of three or four but 7 parties!
We all should remember: In 1934 the increasing numbers of parties had led to a disaster. The majority in parliament had not been granted for whole legislative periods as no party had been strong enough to demonstrate: “no way without us!” Hitler’s party had the chance to rise.
Mrs Merkel took many topics into her hands, however only few challenges had been solved properly since then. The migration policy had cut almost 10% of her voters and moved these leavers more right. But it is true that that statistics show that the share of people with migration background had been increasing from 8% to almost 13% without an expected increase of crime in contemporaneity- the contrary had been the case as the crime rate sank by 18%!
State Finance had been relatively stable: State income had been growing steadily, even having seen the global financial crises, the €-crises and the pandemic crises during her reign. Climate change had been brought up relatively early (2007) however “a plan” had never been set by her consistently. Germany’s state deficit had been 19% in times of (conservative) Konrad Adenauer 1949 to 1963. Since then the deficit remained on that level until Helmut Schmidt (Social democrat) doubled the debts from 20% to 40% of GDP. The reunification of Eastern Germany let the debts increase another time within Helmut Kohl’s reign to 60% and after that, the social democrat Schröder pushed it up to 70% to get reforms in healthcare, pensions and unemployment financed. Merkel had to solve the challenge of the finance crises by increasing the deficits to more than 80% however the growth path (with more jobs than ever!) of Germanys economy allowed her to cut it down below 60% (Maastricht criteria for the EC!) before the pandemic challenge moved it again up to 70%. The financial stability made Germanys economy more resilient compared to other regions.
Deficits per country compared to GDP in %
Deficits in EU Q1 2021 Source: de.statista.com
The deficit policy led to an increase of taxation. Germany is now the country with one of the highest tax-rates for companies amongst the Industrial countries. The increasing tax rates had moved some companies out of Germany and did not encourage new start-ups to come to or remain in Germany.
Germany had started very early with a “green” general discussion. The “Green Party” has now more than 50 years of experience and my generation is already pretty much aware of waste reductions, energy savings or fuel reductions (however not in reducing general speed limits on our motor ways! ). The climate policy costs a lot for all people in Germany. The poorest feel it even more that those having earnings from savings. The cost of electricity has increased enormously. Those industries with the need of high energy (i.e: steel, cement, chemical) are moaning or even moving out of Germany.
The ageing society - which is not a stable but an accelerating process - is changing Germany’s economy as well. Manufacturing industry is using automating processes and jobs are lost. HealthCare in contrast is searching for employees. As the car industry is very large, the unions had been very strong too and pushed wages up sharply. Metalworking industry pays highest wages in the market. Workers in public health care in lieu thereof are getting paid very poor.
Germany’s success has for long time been caused by the integration in World’s trade. Exporting machines, chemical products or cars had made Germany important. 47% of Germany’s GDP (2019) is a result of exports. This success also generated numbers of job opportunities that attracted foreign workers and immigrants. German population increased by almost 3 million people in working age despite of former projections. A second reason for this increase is also a result of Mrs Markel’s support to help women in their role of being an employee and at the same time part of a family.
Politicians took those developments for granted in the same way as did the top managers. But meanwhile it is very obvious: Growth is not an automatic given! Two main reasons are working in contrary to this success story:
The needed change in industry related to climate change and protection of the environment
The accelerated process in ageing societies
De-carbonisation wherever possible is already “main stream”. The catastrophes from California to Canada, from Sydney to Perth, in the midst of Germany or even South of Himalaya make it clear: There will be no way around a change in behaviour of whole mankind.
De-Carbonisation in Germany with Merkel: Reduced, but not reached the target (-30%)!
Source: Statistisches Bundesamt,SIPRI, Umweltbundesamt; statista 08/2021
Germany is lacking in experts. In some industries like Chemical, IT, AI or Pharmaceutical, there is a lack of 30% between offered jobs and employment. It is not needed that the state will help- there is a need to change the behaviour within industrial companies: more cooperation with universities, more and better programs for internal continuing education and advanced training in new technologies. And as Germany is not the only country by searching experts it needs to show a competitive advantage. The “Deutsche Mark” will not come back – the € is the new standard and this currency has demonstrated to be even more stable (“hard currency”) than the “DM” ever had been!
Nationalism within Europe and especially within the European Community had grown. Merkel had not been seen to be powerful enough to reduce the huge differences amongst European national domestic products – we will need a “new start”, a “new approach” for a better future in Europe.
The Merkel epoch had made many people in Germany remaining in their comfort zones. More people had been in jobs than ever before. Unemployment rate could be halved (-44.4%): Almost 5 Million people had been without a job when Merkel took over from former PM Schröder. Now the numbers are close to 2.5 million (including those who had been affected by Covid-19).
This “felt comfort zone” made many to think: No need to act- the state will find a solution. No need to decide – decisions will be made by others. No need for one’s long-term personal individual responsibility: the state will support. It will be most important for those who will build the coming government to get this laziness changed. “Ask not what your country can do for you – ask what you can do for the country!” John F. Kennedy had been the most popular politician in my childhood- there is a need for a new Kennedy for whole Europe now!
The World’s population is still growing. The planet as such is not getting bigger. We will need to find solutions that will allow all people in the World to exist in humanity and we will only profit as long as others will do as well! World’s population from 1950 to 2100:
We will see what Germanys’ voters will vote September 26th. What answers will be given to the challenges of the upcoming 8 decades. More left, more right, more centre?
I’ll remain informing you.
Rüdiger Blaich
Director - Germany
Source of graphs: statista