![]() Productivity in the manufacturing sector actually fell in Germany between 20, the last period for which OECD data is available. Unit labor costs in Germany, for example, have risen 11.6 percent over the past five years - in line with those of Italy and France - while those in Spain have fallen by 0.6 percent over the same period, according to the Paris-based Organisation for Economic Cooperation and Development (OECD). “No one knows what will happen in five to ten years, but it is likely that Germany will run into trouble again if new reforms are not put in place quickly,” Roland Berger, founder and honorary chairman of the business consultancy that carries his name, told Reuters.īut others point to hard data and anecdotal evidence that suggests Germany is losing competitiveness as a business location just as painful reforms and falling wages in countries like Spain are beginning to make them look more attractive. ![]() Some warn that Germany could even return to being the “sick man of Europe” within a decade unless Chancellor Angela Merkel takes bolder action to build on the “Agenda 2010” reforms her predecessor Gerhard Schroeder unveiled in a speech in parliament on March 14, 2003.Īs southern European countries enact deep structural reforms of their own in response to the euro crisis, the worry is that Germany’s competitive edge will be eroded by rising wages, soaring energy costs and what some see as a growing state role in the economy that is discouraging investment.Ĭritics also fault Merkel, in power since 2005, for failing to meaningfully tackle a looming demographic crunch that could hit the economy hard from 2020, and for not moving more aggressively to overhaul a complex tax regime and antiquated education system that is producing too few skilled workers. REUTERS/Tobias Schwarzīut as the 10th anniversary of the reforms credited with fuelling Germany’s success approaches, a small but vocal group of politicians, businessmen and economists is sounding alarm bells over what they see as a dangerous policy complacency in Berlin that is putting the gains of past years at risk. But as the 10th anniversary of the reforms credited with fuelling Germany's success approaches, a small but vocal group of politicians, businessmen and economists is sounding alarm bells over what they see as a dangerous policy complacency in Berlin that is putting the gains of past years at risk. Germany has been held up as a model of economic management at a time when many of its European partners are mired in crisis. Corporate consultant Roland Berger poses behind his desk before a Reuters interview in Berlin March 1, 2013.
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