Germany went from being the sick man of Europe in the 1990s to the economic powerhouse that it is today. Thus, when German firms invested in Central and Eastern Europe, they employed three times as many people with academic degrees and 11 per cent more research personnel in their subsidiaries than in their parent firms.īy the late 2000s, the resulting supply chains had reduced costs and increased productivity in German multinational firms by over 20 per cent. Moreover, the growth of Germany’s human-capital stock (based on measures across five categories of educational attainment) had slowed to an annual rate of 0.18 per cent in the 1990s, compared to 0.75 per cent in the 1980s. In 1998, 16 per cent of the these countries’ populations had university degrees, compared to 15 per cent of Germans. Germany’s eastern neighbours offered a large pool of skilled workers, particularly engineers. The typical (median) German firm that embraced decentralised management increased its export-market share by a factor of three, while firms that stuck with centralised management generally recorded no such gains.įinally, the opening of ex-communist Europe led to expanded production networks, which reduced costs and helped Germany deal with a severe skills shortage.
Germany’s business culture increasingly championed quality, and empowering lower levels of management led firms to introduce more products that customers appreciated. To encourage more creativity among workers, German firms delegated decision-making power to lower levels of management. As trade became more internationalised and competitive, innovation and the generation of new ideas became more important. The opening of the ex-communist countries also introduced de-centralised management. While the 2002-05 Hartz labour-market reforms are often blamed for reducing German wages, the data indicate that they played no role in this development. Germany was the only country in Europe to experience such declines. Owing to this new structural wage restraint (the so-called Lohnzurückhaltung), unit labour costs in Germany declined by 30 per cent between 19. With the loss of union bargaining power, wage negotiations shifted from the national level to the firm level. On the first count, the opening of ex-communist Europe - where labour costs were lower - changed the power equilibrium between Germany’s trade unions and employers’ federation. And third, it extended German production networks into Central and Eastern Europe.
Second, it had a flattening effect on hierarchical management in German firms. First, it led to de-centralised wage bargaining. Liberalisation of trade with the country’s eastern neighbours had three profound effects at home. Germany’s economy was transformed after the fall of communism in 1989.
MUNICH - Will Germany’s economic model survive Russian President Vladimir Putin’s war on Ukraine? As I noted in a recent talk at Harvard University, answering that question requires revisiting recent economic history.
0 kommentar(er)
