2018 OECD ECONOMIC SURVEY OF GERMANY Sustaining strong and inclusive growth Berlin, June 12th 2018 http://www.oecd.org/eco/surveys/economic-survey-germany.htm
@OECDeconomy @OECD
Wellbeing is high OECD Better Life Index, 2017 Germany
Subjective wellbeing
OECD Income and wealth 10.0 8.0
Jobs and earnings
6.0 Personal security
Housing
4.0 2.0 0.0
Environmental quality
Civic engagement and governance Social connections
Work and life balance
Health status Education and skills
Source: OECD (2017), OECD Better Life Index, www.oecdbetterlifeindex.org.
2
Economic growth is robust Real GDP, Index 2007= 100 120
120 Euro Area
Germany
90
2017
90
2016
95
2015
95
2014
100
2013
100
2012
105
2011
105
2010
110
2009
110
2008
115
2007
115
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
3
Relative poverty is low 30
Population with disposable income below the poverty line, % of population, 2015
30 25
20
20
15
15
10
10
5
5
0
0
CZE ISL DNK SVK FIN NOR FRA AUT NLD SVN LUX DEU HUN CHE SWE IRL BEL GBR POL OECD PRT KOR NZL ITA AUS GRC CAN JPN EST ESP LVA CHL USA MEX TUR ISR
25
Note: The poverty line is 60% of median household income. Household income is adjusted to take into account household size. Source: OECD (2018), OECD Social and Welfare Statistics (database). 4
10 10
8 8
6 6
4 4
2 2
2018Q1
2017Q1
2016Q1
2015Q1
2014Q1
2013Q1
2012Q1
2011Q1
2010Q1
2009Q1
2008Q1
2007Q1
2006Q1
2005Q1
2004Q1
2003Q1
2002Q1
12
2001Q1
2000Q1
1999Q1
1998Q1
1997Q1
1996Q1
1995Q1
1994Q1
1993Q1
1992Q1
1991Q1
Unemployment is at a record low Unemployment rate, % of labour force 12
Source: Statistisches Bundesamt. 5
Most German youth are in employment, education or training 30
Youth not in employment, education or training (NEET), % of 15-29 year-olds, 2016
30 25
20
20
15
15
10
10
5
5
0
0
ISL LUX NLD DNK SWE CHE NOR DEU JPN AUT NZL AUS SVN CZE BEL CAN GBR FIN ISR OECD USA LVA EST POL HUN PRT SVK IRL FRA CHL ESP MEX GRC ITA TUR
25
Source: OECD (2017), "Education at a glance: Educational attainment and labour-force status", OECD Education Statistics (database).
6
Wage growth remains moderate Nominal wage growth and inflation Year-on-year growth rates, %
4.5
Inflation
4.5
Nominal wage rate
Note: Inflation is that of the Harmonised consumer price index (HICP). Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
2018Q1
2017Q3
2017Q1
2016Q3
2016Q1
2015Q3
2015Q1
2014Q3
-0.5
2014Q1
-0.5
2013Q3
0.5
2013Q1
0.5
2012Q3
1.5
2012Q1
1.5
2011Q3
2.5
2011Q1
2.5
2010Q3
3.5
2010Q1
3.5
7
High corporate saving contributes to the current account surplus Current account and saving-investment balance, % of GDP
10.0
Current account balance
10.0
Saving-investment balance of corporations
2017
2016
2015
2014
-4.0
2013
-4.0
2012
-2.0
2011
-2.0
2010
0.0
2009
0.0
2008
2.0
2007
2.0
2006
4.0
2005
4.0
2004
6.0
2003
6.0
2002
8.0
2001
8.0
Source: OECD calculations based on OECD (2018), OECD National Accounts Statistics (database) and OECD (2018), OECD Economic Outlook: Statistics and Projections (database ). 8
CHALLENGES
9
Trend productivity growth has slowed Average annual rate of labour productivity growth, 2.5
2.5 1996-2006
2006-16
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
DEU
GBR
JPN
FRA
CAN
SWE
USA
0.0
Note: Average annual growth in trend labour productivity. Source: OECD (2018), "OECD Economic Outlook No. 102 (Edition 2017/2)", OECD Economic Outlook: Statistics and Projections (database). 10
Many workers earn low wages Employees earning low wage, % of all employees 45
45 Germany
EU
36
36
27
27
18
18
9
9
0
Total
Low skilled
Medium skilled
High skilled
Women
Men
0
Note: employees earning low wage are those earning less than two thirds of the median gross hourly earnings. Source: Eurostat (2018), Employment and working conditions (database).
11
Highly educated women earn much less than men Women's earnings as % of men's earnings, Tertiary education graduates, 2014
50
40
40
SWE
50
DNK
60
FIN
60
GBR
70
AUS
70
NLD
80
OECD
80
FRA
90
DEU
90
CAN
100
AUT
100
Source: OECD (2016), Education at a Glance 2016: OECD Indicators.
12
CO2 emissions have fallen little in recent years CO2 emission, tonnes per capita Germany
11.0
OECD
11.0
2014
2013
2012
2011
2010
2009
2008
2007
2006
8.0
2005
8.0
2004
8.5
2003
8.5
2002
9.0
2001
9.0
2000
9.5
1999
9.5
1998
10.0
1997
10.0
1996
10.5
1995
10.5
Note: Emission is production based. Source: OECD (2018), Green Growth Indicators (database). 13
Small particle emissions have not fallen recently Mean annual concentration of PM2.5, Âľg/mÂł
19
Germany
19
OECD
2015
2014
2013
2012
2011
12
2010
12
2009
13
2008
13
2007
14
2006
14
2005
15
2004
15
2003
16
2002
16
2001
17
2000
17
1999
18
1998
18
Source: OECD (2018), Green Growth Indicators (database).
14
USING FISCAL POLICY TO SUPPORT INCLUSIVE GROWTH
15
Labour taxes on low incomes are high 50
Labour income tax and social security contributions, as % of labour costs, 2017 Average tax wedge
Personal income tax
Social security contributions
50
40
30
30
20
20
10
10
0
0
CHL NZL ISR MEX CHE KOR IRL AUS CAN GBR LUX USA ISL NLD JPN OECD NOR TUR DNK POL ESP PRT GRC FIN EST SVK SVN ITA CZE SWE FRA AUT DEU HUN BEL
40
Note: Income tax plus employee and employer social security contributions less cash benefits for single person, no child, earning 67% of average earnings. Source: OECD (2018), Taxing Wages Statistics (database). 16
Environmental tax revenue could be higher 5
Environmental tax revenue, % of GDP, 2014
5
4
3
3
2
2
1
1
0
0
MEX USA CAN CHL NZL JPN SVK CHE ESP AUS DEU FRA LUX ISL BEL NOR IRL PRT SWE GBR KOR EST HUN CZE GRC FIN AUT ISR NLD TUR ITA SVN DNK
4
Source: OECD (2018), "OECD Instruments used for environmental policy", OECD Environment Statistics (database).
17
Expenditure on primary education is low Annual public expenditure in primary education, Per student, USD thousand, PPPs, 2014
21.2
20
20
LUX
CHE
NOR
DNK
GBR
USA
ISL
AUT
SWE
BEL
KOR
SVN
CAN
0
JPN
0
FIN
4
OECD
4
DEU
8
NLD
8
AUS
12
IRL
12
NZL
16
FRA
16
Source: OECD (2017), Education at a Glance 2017: OECD Indicators.
18
Ageing related spending will increase Projections on ageing related spending, % of GDP
%
% 25
25 Pensions, net
Health care
Long-term care
20
20
15
15
10
10
5
5
0
2020
2035
2060
0
Source: European Commission (2015), "The 2015 ageing report: Economic and budgetary projections for the 28 EU Member States (2013-2060)". Based on the reference scenario. 19
Key recommendations for fiscal policies supporting steady inclusive growth •
Use fiscal leeway in a prudent manner, taking capacity constraints into account, to lower the taxation of low wage earnings and to raise priority spending on childcare, education and life-long learning as well as for lowemission transport infrastructure.
•
Index the legal pension age to life expectancy.
•
Introduce spending reviews more broadly at the federal and Länder level and use them to reallocate funding across broad spending fields. More in the Key Policy Insights of the Economic Survey of Germany 2018
20
Key recommendations for boosting green growth •
Extend charging station infrastructure to promote electrification of road transport.
•
Develop congestion pricing.
•
Remove regulatory hurdles to new low-emission urban transport services, including ride-sharing. More in the Key Policy Insights of the Economic Survey of Germany 2018
21
BOOSTING PRODUCTIVITY AND PREPARING FOR THE FUTURE OF WORK
22
Technology diffusion has slowed Multifactor productivity level of German firms, index 2006 =100 A. Manufacturing 130
The rest
Best performers
B. Services 130
120
120
110
110
100
100
90
90
80
80
70
70
60
2006 2007 2008 2009 2010 2011 2012 2013
60
The rest
Best performers
2006 2007 2008 2009 2010 2011 2012 2013
Note:The Best performers are the top 5% firms with highest productivity within each 2-digit sector . Source: OECD calculations based on ORBIS dataset. 23
Small and medium sized firms lag behind in productivity Value added per person employed in SMEs, % of the level of large firms, 2014 140
140 Small (20-49 persons)
Medium (50-249 persons)
120
120
100
100
80
80
60
60
40
40
20
20
0
DEU
DNK
CHE
SWE
FRA
ITA
FIN
ESP
BEL
AUT
GBR
NLD
0
Note: Large firms are firms with more than 250 employed persons. Source: OECD calculations based on OECD (2017), Entrepreneurship at a Glance 2017.
24
Knowledge-based capital contributes little to productivity growth Contribution of KBC to labour productivity growth, Percentage points, business sector, 2000-14
SWE
BEL
AUT
0.00
FRA
0.00
FIN
0.05
CZE
0.05
DNK
0.10
EST
0.10
NLD
0.15
PRT
0.15
DEU
0.20
ESP
0.20
USA
0.25
NOR
0.25
GRC
0.30
ITA
0.30
LUX
0.35
GBR
0.35
Source: OECD (2017), OECD Science, Technology and Industry Scoreboard 2017: The digital transformation.
25
Entrepreneurship has declined Number of new enterprises, index 2012=100 130
130 Belgium
Netherlands
Germany
2017Q1
2016Q3
2016Q1
2015Q3
2015Q1
2014Q3
80
2014Q1
80
2013Q3
90
2013Q1
90
2012Q3
100
2012Q1
100
2011Q3
110
2011Q1
110
2010Q3
120
2010Q1
120
Note: the number of new enterprises is adjusted for business cycle components. Source: OECD (2017), Entrepreneurship at a Glance 2017. 26
Women’s entrepreneurship is low The share of self-employed women, % of total active women, 2016 25
20
20
15
15
10
10
5
5
0
0
NOR JPN DNK SWE EST DEU USA IRL ISL SVN LUX FRA HUN LTU AUT FIN ISR LVA CHE BEL GBR TUR ROU OECD SVK PRT CAN ZAF ESP CZE NLD AUS POL NZL KOR ITA BRA GRC CHL MEX
25
Source: OECD (2017), Entrepreneurship at a Glance 2017.
27
The insolvency regime is efficient OECD indicator of insolvency regime, From least (0) to most (1) restrictive, 2016
0.7
0.7
EST
HUN
NLD
BEL
CAN
AUS
SWE
TUR
SVK
NOR
AUT
LVA
MEX
POL
CZE
ITA
NZL
SVN
0.0
FIN
0.0
CHL
0.1
GRC
0.1
IRL
0.2
ISR
0.2
FRA
0.3
CHE
0.3
USA
0.4
ESP
0.4
PRT
0.5
DEU
0.5
JPN
0.6
GBR
0.6
Note: The OECD insolvency regime indicator capture (1) personal costs to failed entrepreneurs, (2) lack of preventative and streamlining measures and (3) barriers to restructuring. Higher values of the composite indicator correspond to more inefficiency. Source: Adalet McGowan, M., D. Andrews and V. Millot (2017), "Insolvency regimes, zombie firms and capital reallocation", OECD Economics Department Working Papers, No. 1399.
28
The personal costs of failed entrepreneurs are high The subcomponent of the OECD insolvency indicator on personal costs of failed entrepreneurs, from least (0) to most (1) restrictive, 2016 1.0
0.9
0.9
0.8
0.8
0.7
0.7
0.6
0.6
0.5
0.5
0.4
0.4
0.3
0.3
0.2
0.2
0.1
0.1
0.0
0.0
CAN TUR USA AUS CHL GBR JPN LTU RUS AUT CHE CRI DNK ESP FIN FRA GRC IRL ITA LVA MEX NOR NZL SVK SVN BEL DEU EST HUN ISR KOR NLD POL PRT SWE CZE
1.0
Note: The subcomponent captures the stringency of the restrictiveness on the insolvency procedure on failed entrepreneurs, including the length of discharge period. Source: Adalet McGowan, M., D. Andrews and V. Millot (2017), "Insolvency regimes, zombie firms and capital reallocation", OECD Economics Department Working Papers, No. 1399.
29
Low use of e-government raises costs of start-ups Individuals submitting forms to authorities online, % of individual surveyed, 2016
DNK
EST
NOR
FIN
NLD
FRA
IRL
SWE
CHE
LUX
BEL
GBR
LTU
AUT
ESP
LVA
PRT
GRC
HUN
TUR
POL
0
CAN
0
SVN
20
DEU
20
SVK
40
CZE
40
CHL
60
ITA
60
MEX
80
JPN
80
Source: OECD (2017), OECD Digital Economy Outlook 2017.
30
Entry barriers to professional services are high Indicator of regulation in professional services, From least (0) to most (6) stringent 4.0
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
SWE FIN GBR DNK CHE AUS NOR NZL NLD IRL MEX CHL EST OECD ITA JPN KOR FRA CZE ESP BEL SVN ISR DEU AUT SVK PRT GRC HUN CAN POL LUX TUR
4.0
Source: OECD (2015), OECD Product Market Regulation Database.
31
Internet connection speed is slow Average peak connection speed, Megabits per second, Q1 2017 120
90
90
60
60
30
30
0
0
GRC MEX FRA TUR ITA AUS LUX SVN EST LTU AUT CHL DEU POL PRT SVK IRL NZL DNK GBR FIN CZE HUN CAN LVA NLD ESP BEL NOR USA CHE JPN SWE KOR
120
Source: Akamai (2017), “Akamai’s state of the Internet report: Q1 2017 report”, https://www.akamai.com.
32
Many jobs may undergo substantial changes Jobs at high risk of automation and significant change, % of all jobs
70
Jobs at high risk of automation
70
Jobs at risk of significant change
SVK
TUR
GRC
JPN
DEU
CHL
SVN
ESP
ITA
POL
FRA
CZE
AUT
ISR
0
KOR
0
EST
10
IRL
10
BEL
20
CAN
20
NLD
30
DNK
30
GBR
40
USA
40
SWE
50
FIN
50
NZL
60
NOR
60
Source: Nedelkoska, L. and G. Quintini (2018), "Automation, skills use and training", OECD Social, Employment and Migration Working Papers, No. 202, OECD Publishing, Paris.
33
Key recommendations for boosting productivity and preparing for the future of work Boost entrepreneurship and resource allocation •
Ease the conditions for bankrupt entrepreneurs to be discharged of debt after 3 years, while maintaining adequate safeguards for creditors.
•
Create a one stop shop to process all procedures for starting up a company online.
•
Reduce restrictive regulation in the professional services, safeguarding quality standards and consumer interests.
•
Privatise government stakes in the Landesbanken, car manufacturing, telecommunications and postal services.
Strengthen digital infrastructure through competition •
Use the upcoming radio spectrum auction to promote competition in the mobile market.
Expand social protection for the self employed •
Make enrolment in public old-age pension mandatory for the self-employed who are not covered by old-age pension insurance.
•
Open access to public health insurance to all self-employed. More in Chapter 1 of the Economic Survey of Germany 2018 34
IMPROVING SKILLS AND THEIR USE
35
Adults skills lag behind leading countries PIAAC mean proficiency scores in literacy
JPN
240
FIN
240
NLD
250
AUS
250
SWE
260
EST
260
CAN
270
GBR
270
DNK
280
DEU
280
USA
290
AUT
290
OECD
300
FRA
300
Note: The data refer to 15-65 year-olds Source: OECD (2016), Skills Matter: Further Results from the Survey of Adult Skills.
36
Literacy skills are low among workers with low education attainment PIAAC mean proficiency scores in literacy, by educational attainment 350
350 Less than upper secondary
Tertiary
Upper secondary
290
260
260
230
230
200
200
DEU
290
OECD
320
JPN
320
Note: The data refer to 15-65 year-olds Source: OECD (2016), Skills Matter: Further Results from the Survey of Adult Skills. 37
ICT skills lag behind leading countries, especially among the young Population with above basic ICT skills, % of total population, by age cohort, 2017 90
90 16-24 year-olds
25-54 year-olds
55-64 year-olds
75
75
60
60
45
45
30
30
15
15
0
EU28
FRA
DEU
SWE
GBR
AUT
FIN
DNK
NLD
0
Source: Eurostat (2018), Individuals' level of digital skills (database).
38
Women’s skills are under-used Gender difference in PIAAC problem solving skills at work, % of the mean use of skills by women
JPN
AUT
0
DEU
0
NLD
5
FRA
5
OECD
10
CAN
10
AUS
15
DNK
15
USA
20
SWE
20
GBR(Eng.)
25
FIN
25
Note: Gender differences in problem solving skills at work is captured as the difference in of the mean use of skills between men and women. Source: OECD (2016), Skills Matter: Further Results from the Survey of Adult Skills. 39
Educational attainment of disadvantaged students has improved Students with mid-level or higher PISA attainment, as % of disadvantaged students 60
2016
60
2006
50
50
40
40
30
30
20
20
10
10
0
USA
AUT
FRA
SWE
OECD
GBR
AUS
DNK
DEU
NLD
FIN
CAN
JPN
0
Note: The share of students achieving level 3 or above in all three PISA domains (reading, mathematics and science) among the 25% most disadvantaged students in their country according to the PISA index of economic, social and cultural status. Source: Agasisti, T., et al. (2018), "Academic resilience: What schools and countries do to help disadvantaged students succeed in PISA", OECD Education Working Papers, No. 167.
40
Parents’ educational attainment influences children’s skills Difference in PIAAC literacy scores between individuals with parents with high and low educational attainments
60
Unadjusted
60
Adjusted for socio-economic background
DEU
FRA
0
GBR
0
FIN
10
AUT
10
OECD
20
NLD
20
DNK
30
CAN
30
KOR
40
SWE
40
JPN
50
AUS
50
Note: Difference in PIAAC literacy scores between individuals aged 25-65 with one parent educated to tertiary level and no parent educated to upper secondary level. The adjusted differences take into account differences in age, gender, education, immigrant and language background. Source: OECD (2016), Skills Matter: Further Results from the Survey of Adult Skills.
41
The income of vocational graduates increases only little over their lifetime Yearly earnings of 25-65 year-olds men, euros Vocational upper secondary
Vocational tertiary education
General tertiary education
100,000
100,000
80,000
80,000
60,000
60,000
40,000
40,000
20,000
20,000
0
25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65
0
age
Source: Economic Survey of Germany 2018.
42
Participation in lifelong learning could be higher Participation in life-long learning, % of population aged 26-64, 2017 35
35 Germany
Sweden
European Union
5
0
0
2017
5
2016
10
2015
10
2014
15
2013
15
2012
20
2011
20
2010
25
2009
25
2008
30
2007
30
Source: Eurostat (2018), Education and training (database).
43
Key recommendations for improving skills and their use Improve equity in education •
Raise quality standards in childcare and early childhood education.
•
Expand primary education to high-quality full-day education programmes.
Reduce skill mismatch •
Lower the tax burden on the wage income of second earners.
•
Increase the minimum amount of time the second parent has to take parental leave, from the current 2 months, for the couple to receive the maximum leave entitlement.
Improve upskilling opportunities in the vocational education system •
Strengthen general education within vocational schools, and maintain the strong labour market orientation of vocational education and training.
Boost participation in life-long learning •
Offer more training programmes for the modular acquisition of qualifications in life-long learning and foster the recognition of skills acquired on-the-job.
•
Strengthen support for unskilled adults to obtain professional qualifications. More in the Chapter 2 of the Economic Survey of Germany 2018 44
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http://www.oecd.org/eco/surveys/economic-survey-germany.htm 45