What Germany Thinks About Globalization
What Germany Thinks About Globalization

Germany has benefitted from globalization, it’s economic and labor polices allowed the country to thrive despite the Financial Crisis of 2007-2009. The country though faces stark demographic challenges, with an aging population and a shrinking workforce. Many fear that the current prosperity is at risk unless the country can solve its problems. Otherwise, it too will face economic woes in the not-so distant future. These demographic challenges alongside fears of future irrelevance weigh on Germans as they promote fiscal austerity in response to the debt problems plaguing the continent.

In the 2013 election year, Merkel must balance a host of competing interests. The fate of the Union may rest on Germany.  As noted by Almut Moller (2012), heads the Alfred von Oppenheim Center for European Policy Studies at the DGAP, a German think tank:

2013 will be the first real election on European Union matters in Germany, and by the fall of next year, Europeans traveling to Washington with the election results will have a much clearer idea of what is feasible on the euro front. Whether this is good news or not remains to be seen, but one should not underestimate the strength of the foundation that the European idea is built on in Germany. Following the 2013 elections there will be a different European Union, but the end of the Union is not a realistic prospect.

This analysis highlights German perspectives on the European debt crisis, Merkel’s leadership, migration challenges, green energy, and human trafficking. Most of these perspectives are from German newspapers and think tanks.

Trade and Investment – Euro Crisis
With the world’s fourth largest economy and the largest economy in Europe, Germany’s trade and investment policies impact the fate of Europe and much of the world as well. The country’s share of total world trade is about nine percent. Germany’s economy is export-driven. It is the world’s second biggest exporter of goods, behind China. Since 63 percent of its exports are to EU countries, the strength of the EU as a whole, as well as that of the individual countries, is inextricably linked to Germany. Germany though is increasingly looking to Asia and particularly to China to serve as new markets (Hintereder and Orth, Strong economic hub in the global market).

Germany’s social market economy includes long-standing social partnership between trade unions and employers. This partnership gave it the leeway needed to institute shortened work weeks in response to the worldwide economic slowdown. This response to the Financial Crisis, as well as two bank rescue packages and two stimulus packages, helped Germany make it through the crisis relatively unscathed (Hintereder and Orth, Successful social market economy model).

To address the Euro Crisis, Germany has demanded a course of fiscal austerity to countries receiving EU and IMF loan bailouts, though this has not been received positively by the recipient countries’ population. A der Spiegel article on Angela Merkel’s approach to the economic crisis sheds light on how the country is navigating competing interests. Highlights of the article can be found here:

[Merkel] currently holds the fate of Europe in her hands. If the euro is rescued, Merkel will get most of the credit, and if it falls apart, she will be forced to shoulder the blame. No other German chancellor has had as much power on the European continent as the current one….

Close observation of Merkel this year, as she travels through Europe and around the world, reveals a relentlessly objective woman — one who is primarily interested in key indicators like growth rates, demographic trends and debt levels. When Merkel is asked about the causes of the euro crisis, she likes to reply with a brief lecture on economics…

It isn’t sentimentality that drove Merkel to make €400 billion ($520 billion) of German money available to help prop up the euro zone. This quickly becomes clear when she speaks. She treats the debt-ridden countries of Southern Europe like unruly children that have to be brought to their senses so that Germany isn’t dragged into the abyss of the euro crisis along with them….

Merkel’s reality holds: Germany is strong, but not strong enough to keep a sick Europe going in the long term… she believes that it wouldn’t hurt Europe to become a little more German, at least when it comes to incurring debt. How else is the Continent supposed to compete with the up-and-coming Asian economies?

Since becoming chancellor, Merkel has been to China six times. The only non-European country she has visited more often is the United States…

She proceeds cautiously, moving from one crisis summit to the next. If a decision proves to be a mistake, she corrects herself…
It’s a policy devoid of passion, one that assumes that voters should only be given the truth in homeopathic doses. She treats the Germans like children, covering their eyes when reality becomes too horrible to look at. Merkel deliberately keeps things up in the air and ambivalent, leaving room for a variety of possible outcomes…

Merkel doesn’t want to alienate anyone, not the euro skeptics and certainly not the euro supporters. Everyone is taken along for the ride, and because progress only consists of small steps forward, hardly anyone knows where the journey is headed…
She steers clear of sweeping ideas, knowing that they would only provoke resistance. People have supported her until now because the Germans are still the big winners in the euro crisis. They are lulled by the pleasant feeling of finally being able to set the tone in Europe. It’s easy to support a Europe in which one sets the tone.

But now things are beginning to shift. Merkel has admitted, for the first time, that a debt haircut in Greece is conceivable. The crisis is about to become expensive, especially for Germany. The question will be whether the Germans will continue to support Merkel’s levelheaded approach when they’re being asked to fork over real money.

von Hammerstein, K.and Pfister, R. (2012, December 12). Merkel’s Dispassionate Approach to the Euro Crisis. der Spiegel. Retrieved from: http://www.spiegel.de/international/europe/analysis-of-chancellor-merkel-euro-crisis-approach-a-872195.html

Migration
Migration of skilled immigrants is one potential way for Germany to strengthen its economy. The challenges of achieving this policy outcome are addressed by Germany’s Institute for the Study of Labor in a report on the country’s immigration policies and labor shortages.  Excerpts below:

…The two contributing factors to the new German miracle were: (i) that the economic crisis was not indigenous, but touched Germany through its exports and (ii) that labor market reforms and other drastic measures in the country mitigated unemployment…In spite of the global recession, Germany remains Europe’s largest economy that displays dynamism and a secure future. Currently, Germany’s problems are related to labor supply shortages. Policymakers, scholars, trade unions, and businesses alike debate whether these labor shortages are due to genuine labor supply shortages, or to skill mismatches…

Germany, like other developed western countries is facing growing demographic problems; mainly low fertility rates, low mortality rates, and increasing life expectancy…. immigrants are often viewed as a solution to this problem. While many immigrants have been living in Germany for decades, Germany did not have an immigration policy until the new century… In a new decade now, Germany needs to take a firm stance vis-à-vis economic migration and address the needs of its labor markets. Germany should re-orient its immigration policy toward a demand/labor driven immigration….

The purpose of this report is to assess labor shortages in Germany and see how policymakers are informed about them and how they formulate policies to counter these shortages and especially how policymakers develop migrant admission policies…

In fact, German policymakers have set high priority to job-matching within the framework of the German labor market policy, which involves finding the best fit between job seekers and job vacancies. To this end, the so-called GesetzzurNeuausrichtung der arbeitsmarktpolitischenInstrumente (Act on the Reorganization of Labor Market Policy Instruments) entered in force on January 1, 2009 in which the emphasis is, inter alia, on job placement (Bundesregierung, 2009)….

Germany only admitted being an immigration country in the early 2000… Net migration follows a downward trend, since then, reaching a negative balance of 30,000 in 2009. This means that emigration from Germany was higher than the inflow of immigrants to Germany. This trend is partially due to the recent phenomenon of a brain drain in Germany… In 2009, 154,988 native Germans left Germany for other developed nations…

Another related challenge that Germany will be facing soon is its shrinking labor force. In 2008, the total labor force was around 50 million. As portrayed in Figure 7, by 2020, it is estimated to be 47.6 million, and 32.6 million by 2060… Such a development will put a tremendous pressure on the social security system of Germany…

Agenda 2010 opened up room for a new immigration debate in the country. In 2005, a new Immigration Act entered into force and since then, Germany’s immigration policy has been gradually oriented toward labor migration of high skilled foreign workers…

However, with the demographic challenges facing Germany, scholars as well as policymakers have been debating about the channels through which Germany could fill its growing labor supply deficit… In order to partially anticipate these demographic challenges, national strategies to this end have been manifold. First, the focus has been to activate labor reserves within Germany, for example, increasing the labor participation of qualified women, training and qualifying the youth, and reactivating the skills of elderly skilled workers. There are some positive signs in that direction. For instance, over the last decade, women have shown exemplary achievements in education. Not only they outnumber men in schools but they also perform better scholarly.

However, labor migration has also been one important component of this national effort to compensate the skill shortages. Based on recent data of skilled labor migration to Germany between 2006 and 2009, one can say that overall the annual growth rate of gainful employment in accordance with the Residence Act (§18 AufenthG) has been falling. Nonetheless, Germany has been able to attract foreign students who enroll in and graduate from German universities. In addition, over the same time period, the growth rate of self-employed foreigners who move to Germany to open a new business follows an upward trend.

Inefficiencies in the current system coupled with an ever increasing demand for high skilled and qualified workers, has made some policymakers and scholars advocate a new labor migration system, comparable to the point system in Canada…

Constant, A.F., and Bienvenue, N.T. (October 2011). Germany’s Immigration Policy and Labor Shortages. IZA Research Report No. 41. Retrieved from: http://www.iza.org/en/webcontent/publications/reports/report_pdfs/iza_report_41.pdf

Education

Similar to migration, Germany’s education policies are linked to its demographic and economic concerns. The following are excerpts of the 2010 national report on education. It is written by leading German academics and education officials. The report provides data that backs up the claims that the country must deal with its demographic problem, both through migration and labor policies, as well as through education policies.

Demographic change will have far-reaching consequences in the education sector: The number of people under 30, who play an important role in the areas of child care, school, vocational education and higher education, will decline from 25.5 million to 21.3 million by 2025. This means a decrease by 2.6 million, or 15%, in the total number of learners (including family day care for children), who accounted for 16.7 million in 2008. By 2025, the working-age population will have decreased by 10%, from 54.1 million to 48.8 million. At the same time, the number of people aged 65 and older will increase by 21%, from 16.7 million in 2008 to 20.2 million in 2025. This trend in the population age structure will continue and even increase after 2025…

Contexts of Education
The number of births continues to decline while the number of young people with a migration background is increasing…

Participation in Education
Increasing educational participation among children under the age of 3; high participation in day care in the 4-5 age group: Participation in education among children below the age of 3 has increased by 6% in eastern Germany and 7% in western Germany in the period from 2006 to 2009 (Figure 3)…. however, fewer children under 3 attend day care in Germany than in other countries…

Targets of Higher Education Pact I reached in 2009: In 2009, 43.3% of the year group started university, significantly exceeding the 40% target (Figure 4). If limited to students with German nationality, the percentage of university entrants is approximately 6% lower, bringing it below the target.

Women and older employees significantly underrepresented in continuing vocational training in companies: Continuing vocational training in companies is the most important sector of continuing training from a quantitative point of view…

Educational Pathways and Transitions
Number of transitions to school types providing higher qualifications on the rise, but young people with a migration background remain more likely to attend school types offering lower qualifications…

Quality Assurance and Evaluation
Changes in the age structure of participants in continuing education: Unless efforts are increased to encourage continuing education for older employees and to provide training for adults without vocational qualifications, the growing group of older people, who have only taken part in continuing education to a limited extent in the past, would mean a sharp reduction in the number of people participating in continuing education by 2025…

Central Challenges
…Stronger measures must be taken to deal with the increasing rift between the education biographies of those children and adolescents who make successful use of existing educational opportunities and those where disadvantages tend to accumulate..

Measures to impart knowledge and skills and targeted educational support, assistance and guidance must be more closely linked at all levels of education…

The potential resulting from fewer participants in education represents a decisive basis for tackling the problems and challenges described above: Demographic change will accelerate many developments and processes of reform in education. This provides both chances and creative opportunities. Structures and organizational forms of lifelong learning can be developed or newly designed in order to be prepared for future challenges…

Weishaupt, H,. Baethge, M., Döbert, H., Füssel, H., Rauschenbach, T., Rockmann, U., Seeber, S., Wolter, A. Education in Germany 2010. Retrieved from: http://www.bildungsbericht.de/daten2010/summary10.pdf

Environment and Energy

Germany is a world leader in protecting the environment, combating climate change and promoting renewable energies. In 2011, Germany was the first country to decide to stop using nuclear power. Germany reduced its greenhouse gas emissions by nearly 24 percent since 1990 and already fulfilled its Kyoto Protocol obligations.  Nature conservation is articulated in the country’s Basic Laws (Wille).

This article by Craig Morris, an American founder of Petite Planète who is living in Germany and by Martin Pehnt, a German physicist, and scientific director of the Institute for Energy and Environmental Research, highlights Germany’s energy transition policies. Excerpts can be found below:

1. The German energy transition is an ambitious, but feasible undertaking.
…The German can-do attitude is based on the experience over the last two decades, when renewables matured much more quickly, become more reliable and much cheaper than expected. The share of renewable electricity in Germany rose from 6% to 25% in only ten years. On sunny and windy days, solar panels and wind turbines now supply up to half the country’s electricity demand… Recent estimates suggest that Germany will once again surpass its renewable energy target and have more than 40% of its power from renewables by 2020…

2. The German energy transition is driven by citizens and communities.
Germans want clean energy, and a lot of them want to produce it themselves. The Renewable Energy Act guarantees priority grid access to all electricity generated from renewables and is designed to produce reasonable profits. By 2011, more than half of investments in renewables had been made by small investors. Large corporations, on the other hand, have invested relatively little so far. The switch to renewables has greatly strengthened small and midsize businesses, and it has empowered local communities and their citizens to generate their own renewable energy. Across Germany, a rural energy revolution is underway. Communities are benefiting from new jobs and increasing tax revenues, which has become even more important after the debt crisis in the euro zone.

3. The energy transition is Germany’s largest post-war infrastructure project. It strengthens its economy and creates new job
… By replacing energy imports with renewables, Germany’s trade balance will improve and its energy security will strengthen. Already, more than 380,000 Germans work in the renewables sector – far more than in the conventional energy sector. While some of these are manufacturing jobs, many others are in installing and maintenance. These jobs for technicians, installers, and architects have been created locally and can’t be outsourced. They already have helped Germany to come through the economic and financial crisis much better than other countries.

4. With the energy transition, Germany aims to not only keep its industrial base, but make it fit for a greener future.
… German climate and energy policies are designed to maintain a strong manufacturing base at home. On the one hand, industry is encouraged to improve its energy efficiency. On the other, industry benefits from exemptions to regulations… to ease the burden on industry. Contrary to one common misconception, renewables have turned Germany into an attractive location for energy intensive industries. In 2012, wind and solar energy have driven down prices on the wholesale power market by more than 10%. Cheaper electricity means lower business expenses. Industries from steel to glass and cement benefit from these low energy prices….The demand for solar panels, wind turbines, biomass and hydro power plants, battery and storage systems, smart grid equipment, and efficiency technologies will continue to rise. Germany wants to gain a first-mover advantage and develop these high-value engineering technologies “Made in Germany”… When the world switches to renewables, German firms will be well positioned to deliver high quality technology, skills, and services for these markets.

5. Regulation and open markets provide investment certainty and allow small business to compete with large corporations.
Germany’s energy policy is a mix of market-based instruments and regulation. Under the Renewable Energy Act, renewable electricity has guaranteed grid access to provide investment certainty and allow family businesses and small firms to compete with large corporations. The policy enables producers of green electricity to sell their power to the grid at a set rate…. Unlike coal and nuclear power, the costs for renewables are not hidden and passed on to future generations, but transparent and immediate. The government sees its role as setting targets and policies; the market decides how much is invested in renewables and how the price of electricity develops. Consumers are free to choose their power provider so they can buy cheaper electricity or switch to a provider with a 100% renewable portfolio.

6. Germany demonstrates that fighting climate change and phasing out nuclear power can be two sides of the same coin.
A lot of countries are struggling to fulfill their climate commitments. Germany is on track to meet its climate targets. Even after eight nuclear power plants were taken offline in the spring of 2011…

7. The German energy transition is broader than often discussed. It not only includes renewable electricity, but also changes to energy use in the transportation and housing sectors.
… Germany is a leader in “passive houses,” which make heating systems in homes largely redundant. Unfortunately, however, renovation rates are too low for the tremendous efficiency gains from passive house construction to be fully effective. In addition, Germany has not expanded its district heating networks, which allow waste heat from power generators to be used productively, as fast as its neighbors in Austria and Denmark. But perhaps the greatest challenges lie in the transportation sector, where a number of options are being looked into worldwide – from electric mobility to hybrid vehicles. Germany is not a leader in such technologies. But the greatest efficiency gains will come about when we switch from individual mobility to public transport – and from large cars to small vehicles, such as electric bicycles, when we have to resort to individual transportation.

8. The German energy transition is here to stay.
… Germans expect their political leaders to take on the challenge of the energy transition…in general all German political parties today support the energy transition because the German public overwhelmingly does.

9. The energy transition is affordable for Germany, and it will likely be even more affordable for other countries.
Germany has benefited economically from its international leadership role in going renewable… Germany has created the world’s largest domestic solar PV market. German commitment and Chinese mass scale production has helped to drive down the cost of renewables worldwide…

German Energy Transition – Arguments for a renewable energy future. Retrieved from: http://energytransition.de/2012/10/key-findings/

Women and Human Rights
One of the key human rights issues facing Germany is the problem of human trafficking. The German Institute for Human Rights recommends that the country move from a criminal rights perspective to a human rights perspective when addressing the issue of trafficking. Excerpts on their report on this topic:

…Human trafficking was recognized as a major problem in Germany and the European Union in the mid-1990s. The focus of attention was on trafficking of women from Central and Eastern European countries into commercial sexual exploitation, particularly in the context of organised crime…

There have been major changes in the Criminal Code and Code of Criminal Procedure in Germany over the past decade. Human trafficking offences have been adapted to the broad definition of the Palermo Protocol, and the position of the victim in criminal proceedings has been improved by the additional possibilities offered by the Nebenklage (an accessory prosecution procedure that permits victims to participate through counsel in the main proceedings on nearly equal footing with the public prosecutor and the defence) and the witness assistant (Zeugenbeistand)…The 2007 Act Transposing the Residence and Asylum Directives of the European Union…included a reflection period of at least one month and a renewable residence permit for at least six months for victims who testify as witnesses during criminal proceedings. The provision on residence therefore does not exceed the minimum European standard…

Improvements in the area of trafficking women and girls into sex work have been achieved in Germany thanks to cooperation between criminal prosecution officials, non-governmental counselling centres, and agencies and ministries with responsibility for women, foreigners, social affairs, and labour issues…

The structures for cooperation have made an important contribution to progressively getting officials to change their viewpoints and not to see trafficked persons as perpetrators under criminal laws applicable to foreigners but rather as victims of trafficking in women. Improvements have been made in the areas of avoidance of deportation and detention and guaranteeing fundamental social rights such as secure accommodation, a livelihood, access to medical and psychological care and psychosocial support, and access to the labour market, compensation, and legal advice, even if implementation is often criticised as inadequate.

However,aside from the one-month reflection period, all of the aforementioned services are linked to willingness to cooperate in criminal proceedings…

Almost 40 specialised nongovernmental counselling centres have been created throughout Germany to provide advice and assistance to those affected and support them during criminal proceedings and in asserting their rights…

Aside from the difficulties involved in determining the number of unreported cases, it is possible in any event to conclude that most victims of human trafficking into sexual exploitation in Germany are not identified…. Since they have no legal status in Germany, they are expelled as illegal migrants and under certain circumstances detained and deported if they are picked up by German authorities….

Due to earlier requirements of criminal law, the criminal prosecution authorities are organisationally responsible for human trafficking – at least in the large cities in which special units are formed within the police force – in units for what is known as “red-light crime” or for organized crime. Therefore, investigations focus on forced prostitution.

Other forms of human trafficking, such as forced labour in other parts of the informal sector or trafficking into marriage, already fulfilled the elements of a criminal offence – such as coercion, false imprisonment, bodily injury, and rape – under earlier laws. However, they remained hidden due to the clandestine situation of the trafficked persons and the lack of police attention due to structural reasons.

It is customs officials from the Department for the Investigation of Undeclared Work and not the police who encounter trafficked persons in sectors other than the sex industry, such as catering, construction, and cleaning. Therefore trafficked persons are at risk of being perceived solely as undeclared workers and migrants who are illegally staying in the country. Trafficked persons who work in the domestic sector find themselves in an even more clandestine situation…

The long-promised ratification of the Council of Europe Convention on Action against Trafficking in Human Beings should take place as soon as possible. The human rights obligations of the states have not been completely incorporated into the Council of Europe Convention, but it contains many interesting approaches, for example with regard to a gender-resonant and child centred approach, the concept of safe migration, the emphasis on rights to information, and requirements to identify victims and exercise rights to compensation.

Human trafficking, particularly trafficking of women into sex work, has made its way onto the political agenda in Germany over the past decade, and practical improvements have been achieved for trafficked persons, thanks in particular to the dedicated work of cooperative structures and the establishment of a nongovernmental structure for counselling and assistance…

…criminal prosecution is only one of the necessary components of a comprehensive strategy against human trafficking. Criminal law is naturally reactive and can cover only a portion of the actual cases (the vast majority of victims are not identified) and cannot affect the grey areas in which employment relationships based on an arrangement between the parties turn into situations of duress and coercion…

Action against human trafficking into both commercial sexual exploitation and labour exploitation should be integrated into an overall human rights concept for dealing with legal and illegal labour migration. As a result, empowering trafficked persons to assert their rights simultaneously moves to centre stage. This also helps to avoid an artificial separation into human trafficking into sexual exploitation on the one hand and labour exploitation on the other.

Existing laws on residence and work permits should be reviewed to determine whether they help create situations of coercion and exploitation. Greater consideration should be given to opening up the possibility for legal migration…

It is necessary from a human rights viewpoint to separate victims’ rights from the willingness of trafficked persons to testify as witnesses in criminal proceedings…

To do this in Germany, the requirements for temporary residence for trafficked persons pursuant to section 25 (4a) of the German Residence Act (Aufenthaltsgesetz) should be eased and residence for trafficked persons should also be allowed for other purposes, such as the assertion of claims to wages and compensation or rehabilitation for trauma cases…. Accordingly, public financing of non-governmental specialised counselling centres should no longer be limited to services to female victims who testify as witnesses.

Follmar-Otto, P. and Rabe, H. (September 2009). Human Trafficking in Germany: Strengthening Victim’s Human Rights. Retrieved from: http://www.institut-fuer-menschenrechte.de/uploads/tx_commerce/study_human_trafficking_in_germany.pdf

Works Cited

Hintereder, P. and Orth, M. Strong economic hub in the global market. Retrieved from: http://www.tatsachen-ueber-deutschland.de/en/economy/main-content-06/strong-economic-hub-in-the-global-market.html

Hintereder, P. and Orth, M. Successful social market economy model. Retrieved from:
http://www.tatsachen-ueber-deutschland.de/en/economy/main-content-06/successful-social-market-economy-model.html

Moller, A. (2012, December 3). Berlin Getting Into Election Gear. IP Journal. Retrieved from: https://ip-journal.dgap.org/en/ip-journal/topics/berlin-getting-election-gear

Wille, J. Paths to a modern and sustainable climate and energy policy. Retrieved from: http://www.tatsachen-ueber-deutschland.de/en/environment-climate-energy/startseite-klima/paths-to-a-modern-and-sustainable-climate-and-energy-policy.html

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