The undisputed economic leader of the Eurozone. The almost undisputed political leader of the EU. Years of economic growth and low unemployment rates. What could possibly go wrong in Germany?
The international reputation of Germany is still untarnished. A country that actually tried to deal with its notorious past by building a solid democracy, and one that not only created one but two Wirtschaftswunder (economic miracles): in the decades after World War II, and in the years after the introduction of the euro (and some budget-cutting measures of its own, some people might argue).
Not so sunny
Having lived in Berlin for seven years now, and especially with my special focus on innovation and digital transformation, it has become obvious there are more and more cracks appearing in the beautiful face for the outside world though.
To start on the macro-economic level, German growth has mainly been caused by strong exports. By imposing strong austerity measures on other nations, it has also strengthened its own position at the expense of others. Yes, these mainly southern European countries should have cleaned up their own mess earlier. But austerity is not always the right answer, as has been proven by Portugal in recent years.
Secondly, the German economy also strongly relies on low wages. Cuts to social security (the so-called Hartz IV-measures) have led to more and more poverty, and pensioners struggling to make ends meet. If you want to start your career here, expect to first get a trainee job for two years (and a salary that fits the description).
Homeless
On a micro-economic level that actually leads to more and more homeless people on the streets of Berlin, for example. The number of beggars in the public transport is noticeable and supported by the numbers (in German): apparently an increase of 33% in the past five years, and up to 50‘000 people without a home in the capital alone. Most of these people actually end up in some emergency accommodation by the way so are not continuously living in the streets, but still…
Walking around in the city it is hard to not see the staggering levels of poverty in some areas. Prenzlauer Berg and Mitte are doing just fine, but in my neighborhood (Wedding) or others it is hard to believe it is the richest economy of Western Europe. Pawnshops and casinos everywhere, not to mention the feeling that assholes and criminals are ruling the streets. Most Germans prefer to look away.
Infrastructure
There aren‘t only cracks in the economy. The infrastructure is slowly becoming laughable. On my recent trip to Central America, I had splendid mobile internet reception on a 3‘800 metres high volcano far away from the rest of the world. Coming back to Germany, obviously most of the train trip was without any signal.
Talking about trains: it might be an easy target, but how is it possible that not even 70% of the long-distance trains are running on schedule? Talk about it with Germans and they will say ‚it is not so bad, what are thirty minutes in a life?‘
It is actually this mentality, sugarcoating or just ignoring problems, that is probably the biggest hurdle for improving the situation. Look at the diesel scandal, where there has been a huge reluctance to change the company culture at Volkswagen and other companies, and the government has tried to protect the car industry.
At its heart, Germany is conservative and hates change. In these digital times, where economies change quicker than you can imagine, that causes huge problems.
Recession
All circumstantial evidence, you say? Well, the numbers are saying a recession is coming. Only the strong exports have rescued the economy until now, but growth figures have been adjusted downwards. The inevitable will soon happen, at a moment when right-wing populism and nationalism are on the rise and this year regional elections are scheduled in the eastern (and still poorer) parts of the country. That is a toxic mix.
That makes Germany seem like a rabbit in a headlight. Ignoring the problems ahead, hoping that the problems will magically disappear.
Hope
To be fair, it‘s not all bad news. Look at the solar industry, or in general the clean energy industry, and Germany is actually at the forefront of that. Whether there is the courage to see this through is another question, but the starting position is promising.
And in the last two years it seems the industrial giants have woken up. The likes of Mercedes Benz, Bosch and Siemens are looking for innovation consultants, UX designers, product managers and many more jobs in innovative areas. They are finally embracing flexible work constructs, agile processes and design thinking is the buzzword of the day.
Whether it is enough? Hard to say. But it is obvious that under the layers of make-up the German skin is showing worrying signs of deterioration. Time for a facelift.
P.s. I am writing about economic/digital/political subjects whenever I feel like it. Similar posts can be found here
