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2018 OECD ECONOMIC SURVEY OF GERMANY
Sustaining strong and inclusive growth Berlin, June 12th 2018
@OECD @OECDeconomy
http://www.oecd.org/eco/surveys/economic-survey-germany.htm
2
Wellbeing is high
Source: OECD (2017), OECD Better Life Index, www.oecdbetterlifeindex.org.
0.0
2.0
4.0
6.0
8.0
10.0Income and wealth
Jobs and earnings
Housing
Work and lifebalance
Health status
Education andskillsSocial connections
Civic engagementand governance
Environmentalquality
Personal security
Subjective well-being
OECD Better Life Index, 2017
Germany OECD
90
95
100
105
110
115
120
90
95
100
105
110
115
120
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Real GDP, Index 2007= 100
Euro Area Germany
3
Economic growth is robust
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
4
Relative poverty is low
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).
0
5
10
15
20
25
30
0
5
10
15
20
25
30
CZE IS
LD
NK
SVK
FIN
NO
RFR
AA
UT
NLD
SVN
LUX
DE
UH
UN
CH
ESW
EIR
LB
EL
GB
RPO
LO
EC
DPR
TK
OR
NZL IT
AA
US
GR
CC
AN
JPN
EST
ESP
LVA
CH
LU
SAM
EX
TUR
ISR
Population with disposable income below the poverty line, % of population, 2015
5
Unemployment is at a record low
Source: Statistisches Bundesamt.
2
4
6
8
10
12
2
4
6
8
10
12
1991
Q1
1992
Q1
1993
Q1
1994
Q1
1995
Q1
1996
Q1
1997
Q1
1998
Q1
1999
Q1
2000
Q1
2001
Q1
2002
Q1
2003
Q1
2004
Q1
2005
Q1
2006
Q1
2007
Q1
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
2013
Q1
2014
Q1
2015
Q1
2016
Q1
2017
Q1
2018
Q1
Unemployment rate, % of labour force
6
Most German youth are in employment, education or training
Source: OECD (2017), "Education at a glance: Educational attainment and labour-force status", OECD Education Statistics (database).
0
5
10
15
20
25
30
0
5
10
15
20
25
30
ISL
LUX
NLD
DN
KSW
EC
HE
NO
RD
EU
JPN
AU
TN
ZLA
US
SVN
CZE
BE
LC
AN
GB
RFI
NIS
RO
EC
DU
SALV
AE
STPO
LH
UN
PRT
SVK
IRL
FRA
CH
LE
SPM
EX
GR
CIT
ATU
R
Youth not in employment, education or training (NEET), % of 15-29 year-olds, 2016
7
Wage growth remains moderate
-0.5
0.5
1.5
2.5
3.5
4.5
-0.5
0.5
1.5
2.5
3.5
4.5
2010
Q1
2010
Q3
2011
Q1
2011
Q3
2012
Q1
2012
Q3
2013
Q1
2013
Q3
2014
Q1
2014
Q3
2015
Q1
2015
Q3
2016
Q1
2016
Q3
2017
Q1
2017
Q3
2018
Q1
Nominal wage growth and inflation Year-on-year growth rates, %
Inflation Nominal wage rate
Note: Inflation is that of the Harmonised consumer price index (HICP). Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
8
High corporate saving contributes to the current account surplus
Source: OECD calculations based on OECD (2018), OECD National Accounts Statistics (database) and OECD (2018), OECD Economic Outlook: Statistics and Projections (database ).
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Current account and saving-investment balance, % of GDP
Current account balance Saving-investment balance of corporations
CHALLENGES
9
10
Trend productivity growth has slowed
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).
0.0
0.5
1.0
1.5
2.0
2.5
0.0
0.5
1.0
1.5
2.0
2.5
DEU GBR JPN FRA CAN SWE USA
1996-2006 2006-16
Average annual rate of labour productivity growth,
0
9
18
27
36
45
0
9
18
27
36
45
Total Low skilled Mediumskilled
High skilled Women Men
Employees earning low wage, % of all employees
Germany EU
11
Many workers earn low wages
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).
12
Highly educated women earn much less than men
Source: OECD (2016), Education at a Glance 2016: OECD Indicators.
40
50
60
70
80
90
100
40
50
60
70
80
90
100
AU
T
CA
N
DE
U
FRA
OE
CD
NLD
AU
S
GB
R
FIN
DN
K
SWE
Women's earnings as % of men's earnings, Tertiary education graduates, 2014
13
CO2 emissions have fallen little in recent years
8.0
8.5
9.0
9.5
10.0
10.5
11.0
8.0
8.5
9.0
9.5
10.0
10.5
11.0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
CO2 emission, tonnes per capita
Germany OECD
Note: Emission is production based. Source: OECD (2018), Green Growth Indicators (database).
14
Small particle emissions have not fallen recently
12
13
14
15
16
17
18
19
12
13
14
15
16
17
18
19
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mean annual concentration of PM2.5, µg/m³
Germany OECD
Source: OECD (2018), Green Growth Indicators (database).
USING FISCAL POLICY TO SUPPORT INCLUSIVE GROWTH
15
0
10
20
30
40
50
0
10
20
30
40
50
CH
LN
ZL ISR
ME
XC
HE
KO
RIR
LA
US
CA
NG
BR
LUX
USA IS
LN
LD JPN
OE
CD
NO
RTU
RD
NK
POL
ESP
PRT
GR
CFI
NE
STSV
KSV
NIT
AC
ZESW
EFR
AA
UT
DE
UH
UN
BE
L
Labour income tax and social security contributions, as % of labour costs, 2017
Average tax wedge Personal income tax Social security contributions
16
Labour taxes on low incomes are high
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).
17
Environmental tax revenue could be higher
0
1
2
3
4
5
0
1
2
3
4
5
ME
XU
SAC
AN
CH
LN
ZLJP
NSV
KC
HE
ESP
AU
SD
EU
FRA
LUX
ISL
BE
LN
OR
IRL
PRT
SWE
GB
RK
OR
EST
HU
NC
ZEG
RC
FIN
AU
TIS
RN
LDTU
RIT
ASV
ND
NK
Environmental tax revenue, % of GDP, 2014
Source: OECD (2018), "OECD Instruments used for environmental policy", OECD Environment Statistics (database).
18
Expenditure on primary education is low
0
4
8
12
16
20
0
4
8
12
16
20
FRA
NZL IR
L
AU
S
NLD
DE
U
OE
CD
FIN
JPN
CA
N
SVN
KO
R
BE
L
SWE
AU
T
ISL
USA
GB
R
DN
K
NO
R
CH
E
LUX
Annual public expenditure in primary education, Per student, USD thousand, PPPs, 2014
21.2
Source: OECD (2017), Education at a Glance 2017: OECD Indicators.
19
Ageing related spending will increase
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.
0
5
10
15
20
25
0
5
10
15
20
25
2020 2035 2060
% % Projections on ageing related spending, % of GDP
Pensions, net Health care Long-term care
• 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 low-emission 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 fiscal policies supporting steady inclusive 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
Key recommendations for boosting green growth
BOOSTING PRODUCTIVITY AND PREPARING FOR THE FUTURE OF WORK
22
23
Technology diffusion has slowed
Multifactor productivity level of German firms, index 2006 =100
Note:The Best performers are the top 5% firms with highest productivity within each 2-digit sector . Source: OECD calculations based on ORBIS dataset.
60
70
80
90
100
110
120
130
2006 2007 2008 2009 2010 2011 2012 2013
A. Manufacturing
The rest Best performers
60
70
80
90
100
110
120
130
2006 2007 2008 2009 2010 2011 2012 2013
B. Services
The rest Best performers
24
Small and medium sized firms lag behind in productivity
Note: Large firms are firms with more than 250 employed persons. Source: OECD calculations based on OECD (2017), Entrepreneurship at a Glance 2017.
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
DEU DNK CHE SWE FRA ITA FIN ESP BEL AUT GBR NLD
Value added per person employed in SMEs, % of the level of large firms, 2014
Small (20-49 persons) Medium (50-249 persons)
25
Knowledge-based capital contributes little to productivity growth
Source: OECD (2017), OECD Science, Technology and Industry Scoreboard 2017: The digital transformation.
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
GB
R
LUX
ITA
GR
C
NO
R
USA ESP
DE
U
PRT
NLD EST
DN
K
CZE FI
N
FRA
AU
T
BE
L
SWE
Contribution of KBC to labour productivity growth, Percentage points, business sector, 2000-14
26
Entrepreneurship has declined
80
90
100
110
120
130
80
90
100
110
120
130
2010
Q1
2010
Q3
2011
Q1
2011
Q3
2012
Q1
2012
Q3
2013
Q1
2013
Q3
2014
Q1
2014
Q3
2015
Q1
2015
Q3
2016
Q1
2016
Q3
2017
Q1
Number of new enterprises, index 2012=100
Belgium Netherlands Germany
Note: the number of new enterprises is adjusted for business cycle components. Source: OECD (2017), Entrepreneurship at a Glance 2017.
27
Women’s entrepreneurship is low
Source: OECD (2017), Entrepreneurship at a Glance 2017.
0
5
10
15
20
25
0
5
10
15
20
25
NO
RJP
ND
NK
SWE
EST
DE
UU
SA IRL
ISL
SVN
LUX
FRA
HU
NLT
UA
UT
FIN
ISR
LVA
CH
EB
EL
GB
RTU
RR
OU
OE
CD
SVK
PRT
CA
NZA
FE
SPC
ZEN
LDA
US
POL
NZL
KO
RIT
AB
RA
GR
CC
HL
ME
X
The share of self-employed women, % of total active women, 2016
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
GB
RJP
ND
EU
PRT
ESP
USA
CH
EFR
AIS
RIR
LG
RC
CH
LFI
NSV
NN
ZL ITA
CZE
POL
ME
XLV
AA
UT
NO
RSV
KTU
RSW
EA
US
CA
NB
EL
NLD
HU
NE
ST
OECD indicator of insolvency regime, From least (0) to most (1) restrictive, 2016
28
The insolvency regime is efficient
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.
29
The personal costs of failed entrepreneurs are high
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.
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
CA
NTU
RU
SAA
US
CH
LG
BR
JPN
LTU
RU
SA
UT
CH
EC
RI
DN
KE
SP FIN
FRA
GR
CIR
LIT
ALV
AM
EX
NO
RN
ZLSV
KSV
NB
EL
DE
UE
STH
UN
ISR
KO
RN
LD POL
PRT
SWE
CZE
The subcomponent of the OECD insolvency indicator on personal costs of failed entrepreneurs, from least (0) to most (1)
restrictive, 2016
30
Low use of e-government raises costs of start-ups
0
20
40
60
80
0
20
40
60
80
JPN
ME
XIT
AC
HL
CZE
SVK
DE
USV
NC
AN
POL
TUR
HU
NG
RC
PRT
LVA
ESP
AU
TLT
UG
BR
BE
LLU
XC
HE
SWE
IRL
FRA
NLD FI
NN
OR
EST
DN
K
Individuals submitting forms to authorities online, % of individual surveyed, 2016
Source: OECD (2017), OECD Digital Economy Outlook 2017.
31
Entry barriers to professional services are high
Source: OECD (2015), OECD Product Market Regulation Database.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
SWE
FIN
GB
RD
NK
CH
EA
US
NO
RN
ZLN
LD IRL
ME
XC
HL
EST
OE
CD
ITA
JPN
KO
RFR
AC
ZE ESP
BE
LSV
NIS
RD
EU
AU
TSV
KPR
TG
RC
HU
NC
AN
POL
LUX
TUR
Indicator of regulation in professional services, From least (0) to most (6) stringent
32
Internet connection speed is slow
Source: Akamai (2017), “Akamai’s state of the Internet report: Q1 2017 report”, https://www.akamai.com.
0
30
60
90
120
0
30
60
90
120
GR
CM
EX
FRA
TUR
ITA
AU
SLU
XSV
NE
STLT
UA
UT
CH
LD
EU
POL
PRT
SVK
IRL
NZL
DN
KG
BR
FIN
CZE
HU
NC
AN
LVA
NLD ESP
BE
LN
OR
USA
CH
EJP
NSW
EK
OR
Average peak connection speed, Megabits per second, Q1 2017
33
Many jobs may undergo substantial changes
0
10
20
30
40
50
60
70
0
10
20
30
40
50
60
70
NO
R
NZL FIN
SWE
USA
GB
R
DN
K
NLD
CA
N
BE
L
IRL
EST
KO
R
ISR
AU
T
CZE
FRA
POL
ITA
ESP
SVN
CH
L
DE
U
JPN
GR
C
TUR
SVK
Jobs at high risk of automation and significant change, % of all jobs
Jobs at high risk of automation Jobs at risk of significant change
Source: Nedelkoska, L. and G. Quintini (2018), "Automation, skills use and training", OECD Social, Employment and Migration Working Papers, No. 202, OECD Publishing, Paris.
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
Key recommendations for boosting productivity and preparing for the future of work
IMPROVING SKILLS AND THEIR USE
35
36
Adults skills lag behind leading countries
PIAAC mean proficiency scores in literacy
Note: The data refer to 15-65 year-olds Source: OECD (2016), Skills Matter: Further Results from the Survey of Adult Skills.
240
250
260
270
280
290
300
240
250
260
270
280
290
300
FRA
OE
CD
AU
T
USA
DE
U
DN
K
GB
R
CA
N
EST
SWE
AU
S
NLD FI
N
JPN
37
Literacy skills are low among workers with low education attainment
PIAAC mean proficiency scores in literacy, by educational attainment
Note: The data refer to 15-65 year-olds Source: OECD (2016), Skills Matter: Further Results from the Survey of Adult Skills.
200
230
260
290
320
350
200
230
260
290
320
350
JPN
OE
CD
DE
U
Less than upper secondary Tertiary Upper secondary
38
ICT skills lag behind leading countries, especially among the young
Population with above basic ICT skills, % of total population, by age cohort, 2017
Source: Eurostat (2018), Individuals' level of digital skills (database).
0
15
30
45
60
75
90
0
15
30
45
60
75
90
EU28 FRA DEU SWE GBR AUT FIN DNK NLD
16-24 year-olds 25-54 year-olds 55-64 year-olds
39
Women’s skills are under-used
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.
0
5
10
15
20
25
0
5
10
15
20
25
FIN
GB
R(E
ng.)
SWE
USA
DN
K
AU
S
CA
N
OE
CD
FRA
NLD
DE
U
AU
T
JPN
Gender difference in PIAAC problem solving skills at work, % of the mean use of skills by women
40
Educational attainment of disadvantaged students has improved
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.
0
10
20
30
40
50
60
0
10
20
30
40
50
60
USA AUT FRA SWE OECD GBR AUS DNK DEU NLD FIN CAN JPN
Students with mid-level or higher PISA attainment, as % of disadvantaged students
2016 2006
41
Parents’ educational attainment influences children’s skills
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.
0
10
20
30
40
50
60
0
10
20
30
40
50
60
AU
S
JPN
SWE
KO
R
CA
N
DN
K
NLD
OE
CD
AU
T
FIN
GB
R
FRA
DE
U
Difference in PIAAC literacy scores between individuals with parents with high and low educational attainments
Unadjusted Adjusted for socio-economic background
42
The income of vocational graduates increases only little over their lifetime
0
20,000
40,000
60,000
80,000
100,000
0
20,000
40,000
60,000
80,000
100,000
25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65
Yearly earnings of 25-65 year-olds men, euros
Vocational upper secondary Vocational tertiary education General tertiary education
age
Source: Economic Survey of Germany 2018.
43
Participation in lifelong learning could be higher
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
35
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Participation in life-long learning, % of population aged 26-64, 2017
Germany Sweden European Union
Source: Eurostat (2018), Education and training (database).
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
Key recommendations for improving skills and their use
45
For more information
http://www.oecd.org/eco/surveys/economic-survey-germany.htm
Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
