A standstill threatens through poor productivity growth
Public finances currently present a pleasant picture with a budget surplus. Demographic developments will place the public budget under massive pressure in the medium and long term. Germany’s population is set to decline from around 80 to 70 million by 2060. The share of the population of working age would shrink from 65 percent now to 50 percent. Demography-dependent spending by public authorities would increase from around 25 percent to more than 30 percent.
Low investments are leading to low productivity growth worldwide
Growth in labour productivity has fallen in all developed countries in recent decades. Both weak investment activity and deficits in innovation and structural policy are responsible for this. Those countries with high research and development rate are doing better on average. Manufacturing is producing higher productivity growth than the services sector. It can also be observed that a few firms on the technological front exhibit very high productivity growth. However, most companies in the midfield cannot keep up.
Economic policy can successfully help to correct the course
BDI presents a host of measures to increase productivity:
- Increase investments, in particular in the digital sphere
- Promote research, development and education
- Make product and labour markets more flexible
- Intensify international trade
Read the complete catalogue of recommendation and the analysis in the Industrial Policy Dossier (currently in German language only).