Study calls for more jobs: Germany’s prosperity in jeopardy

Status: 05/17/2022 10:36 AM

Worse growth prospects, slowing productivity gains, aging populations. A study by the economic consultancy Deloitte showed a deficit in the German economy.

In the midst of the ending Corona pandemic and the Ukraine war, the German economy stands at a crossroads. This is the result of a study conducted by experts from the consulting firm Deloitte. They demand clear political and economic measures to maintain prosperity in Germany.

Faster digitization and a flexible labor market

More working women, more digitization and more startups: according to the study authors, these are the basic requirements to keep Germany on the growth path of the past decades. “How the course is set in the coming years will determine the future prosperity of the country and the quality of life of future generations,” says Volker Krug, president of Deloitte in Germany.

The fact that the level of prosperity in Germany is on the brink is demonstrated above all by the slowdown in productivity in Europe’s largest economy. According to the study, productivity growth in Germany has halved over the past decade compared to the previous ten-year period.

This is especially bad in light of an aging society with a declining working population. If the negative productivity trend cannot be reversed, the site will lose its competitiveness, Deloitte experts emphasized.

growth retardation

In terms of growth, Germany has actually become more aggressive at the European level, which is also evidenced by the current economic forecasts published yesterday by the European Commission. Accordingly, the Commission believes that Germany is only able to achieve a GDP growth of 1.6% in the current year. So far, the forecast was 3.6 percent.

For the next year, the forecast was lowered from 2.6 to 2.4 percent. This means that growth in Germany in 2022 will also be weaker than in the eurozone as a whole, where 2.7 percent growth is expected.

Digitization, flexibility and less bureaucracy

According to Deloitte experts, with the “correct” policy, it will be possible to achieve annual growth rates of 3.4% in Germany in the coming years. The labor market is the main lever in this regard. Automation cannot make up for the growing shortage of skilled workers. But with flexible working hours and intensive childcare, more women can work full time. A higher rate of labor force participation among foreign nationals and the elderly will also help.

However, this also requires software investments and rapid broadband expansion, and Germany should “take a more specific approach to digitization and significantly increase the speed of implementation,” according to the study. Last but not least, more venture capital investment and less management effort would result in a real ‘growth boost’.

Students below the poverty line

However, the economic situation with a sharp rise in prices creates a difficult starting point for the next generation, which is supposed to drive growth in Germany in the coming decades: according to Paritätischer Wohlfahrtsverband, nearly a third of all students live in poverty. According to a study published in Berlin today, 30 percent of all students in Germany are affected.

Four out of five students who live alone live below the poverty line. The average income of poor students is 802 euros. This puts them 463 euros below the poverty line.

BAföG is not enough

Not only 80 percent of single-person households are disproportionately affected by poverty, but also 45 percent of students with BAföG. So Ulrich Schneider, managing director of Paritätisches Gesamtverband, is calling for a far-reaching reform of BAföG.

Especially with the current price hikes, there is a risk of more heavy burdens, debts and dropouts for many poor students. According to the association, a pre-planned increase in BAföG rates by five percent to €449 in the future does not even make up for the real loss of purchasing power due to current inflation.

Leave a Comment