Germany - Overview:
Germany has a population in excess of 80 million people and a workforce of more than 40 million. With a GDP approaching EUR 2 trillion it is the world's third largest economy and has low inflation of around 2 percent. Economic growth, however, is limited and growth has only exceeded 2 per cent during two of the past ten years. In 2001 it was the lowest in the EU averaging only 0.6 per cent and this has only increased slightly to 0.75 per cent for 2002. Unemployment is generally high at around 10 per cent. The country has an ageing population, which together with the high rate of unemployment has caused social security expenditure to reach a level exceeding contributions from workers.
Economy:
Since 1990, the process of integrating East Germany's former communist economy and West Germany's capitalist economy has been difficult and costly. Every year transfers of wealth to the East average over EUR 72 billion. However, regional disparities remain. Unemployment in the East is consistently more than double that of the West and per-capita output is only about 60 per cent of the level in Western Germany.
The bulk of the nation's GDP, nearly 69 per cent, comes from the service sector, just over 30 percent from the industrial sector and the rest from agriculture. Within the industrial sector the automobile industry is by far the most important. It is the third largest producer of automobiles in the world, employs in excess of 650,000 people and has an annual turnover of approximately EUR 274 billion.
The German economy is significantly geared towards international trade and, after the USA, has the largest foreign trade turnover in the world. About one in four jobs depend on exports in one way or another. This figure is even greater in the manufacturing centre, which exports about a quarter of its output. Among Germany's main exports are automobiles, machinery, chemical products and electrical engineering products. Germany's largest trading partners are within the EU, primarily France, with the USA and Japan the largest outside of the EU. Trade with China and that with Eastern European nations is of comparable size.
Infrastructure:
Germany has a well developed airport infrastructure with all major cities offering regular flights to European destinations. Frankfurt is one of Europe's busiest airports both in terms of the amount of freight and the number of passengers it handles.
There are approximately 44,000 km of railway tracks nearly half of which are electrified. Most of Germany's major cities are connected via the highly efficient inter city express system. By 2005, Hamburg and Berlin will be connected by a 400 KPH high speed train employing an electromagnetic levitation system. The journey between the two cities will take just one hour.
There is an extensive waterway system that includes the Rhine, Elbe and Danube rivers. The Rhine flows from Switzerland in a northwesterly direction through Western Germany and The Netherlands to the North Sea. The Elbe travels from the Czech mountains to the seaport of Hamburg in the northwest of the country. South Germany is connected via the Danube to Austria and Eastern Europe. The Rhine-Danube canal allows freight to pass from the North to the Black Sea.
Germany has one of the world's most technologically advanced telecommunications systems, resulting in part from the significant investment that has occured since reunification in order to modernise and integrate the East and West of the country. There is more than one telephone main line for every two members of the population and extensive mobile phone use.
Workforce:
The average working time per week in Germany varies between the East of the country, at between 37 and 40 hours, and the West, at between 35 and 38 hours. The average amount of time taken for holidays is in the region of 30 days a year.
Approximately one tenth of the county's total workforce are unemployed but conversely, some companies are struggling to fill available positions. There is particular difficulty in recruiting for low wage positions and this is encouraging employers to seek foreign labour. Qualified personnel are also in short supply and, according to the Federal State Commission for Education Planning, significant changes are needed in schools and universities to prevent this problem from worsening. One explanation for the shortage is that the failure and drop out rates of university students in Germany exceed those of most other countries.
New Technologies:
In order to conduct research that is commercially viable, many of the small and medium sized companies in Germany, supported by the Government, cooperate on a basis of joint pre-competition research and technology transfer. This enables companies and entrepreneurs to access information from outside their respective fields of activity relating to new technologies and production processes.
Business Costs:
In recent years Germany has dramatically reduced the level of corporate taxes levied. In 2000, for example, the overall tax rate was cut from 51.63 per cent to 38.36 per cent.
International call costs are in the mid-range of many European countries. The average cost per minute for international calls by a 100-line business customer is roughly EUR 0.19. For Italy the cost is about EUR 0.26, for Finland and the Netherlands it is in the region of EUR 0.25 and for the UK and France it is about EUR 0.16 and EUR 0.11 respectively.
Wage levels can be a problem as a result of the highly unionised German workforce. The unions attempt to limit the variation in wages between industries and sectors and as a result several industries have wages that are too high in relation to productivity and output. The hourly rate for production workers in manufacturing, at approximately EUR 26.50 is relatively high compared with countries such as the UK, France and Spain.
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