Think ‘Talent in Germany’ and a broad base of world-class companies spring to mind.
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To the rest of Europe and the world, it’s an economy built on high-performance goliaths in sectors that vary from Automotive, Chemicals, Electronics, Engineering, Food & Beverages and Machinery, to Steel, Coal, Shipbuilding and Textiles. It’s little wonder that Germany has one of the lowest rates of unemployment in Europe and fares strongly in terms of its labour market stability.
Nevertheless, Germany, like any other country, has challenges to deal with – and contrary to popular thinking, ‘the German miracle’ isn’t cocooned from the problems felt by other Western economies. Far from it. Germany’s fertility rate has fallen greatly since the 1970s and even now it is far below the replacement rate of 2.1. This is a factor contributing to Germany’s relatively low unemployment rate – but it has also created skills shortages, with 144,000 IT and Technology roles currently ‘open’ across the federal states. So how has Germany overcome the obstacles?
Look closely at the fundamentals underlying the ‘German System’ and you’ll see the results of their joined-up thinking. As the rest of Europe struggles with the highest youth unemployment in modern history, Germany has one of the lowest unemployment rates (7.9%) for the age group 15-24. So what is the reason for this?
Two factors define this structural strength:
- The Duale Ausbildung [Dual education system]
- Mittelstand Enterprises – essentially small to medium-sized enterprises. Over 90% of all German companies are classified as Mittlestand and provide approximately two-thirds of all German jobs (producing more than 50% of Germany’s output).
These kinds of businesses are often deeply specialized in global niche markets – and consequently, become very export-oriented and highly innovative. The majority of Mittlestand enterprises are focused in machinery, automotive parts, chemicals and electrical equipment, heavily contributing to Germany’s position as a leading industrial base of the world.
This SME ‘core’ also adds significantly to the famous ‘economic balance’ between German Manufacturing and Service industries. The majority of the labour market is based on the service sector, but industry remains a substantial presence employing well over eight million workers (the vast majority being male).
So as well as being a hothouse for SMEs, Germany continues to be a world leader in the automotive industry (which last year produced over €350 million of revenue), while being competitive and profitable in numerous other industries such as Health, Chemicals & Pharmaceuticals and Mechanical & Plant Engineering. It is no wonder the top five ‘most required’ occupations in Germany are Doctors, Engineers, Scientists, IT Specialists and Experts with Vocational Training.
All of these occupations require high skills and most of them work in the Mittelstand Enterprises that form the backbone of the German economic model.
Top Image Credit: German labor market thrives despite eurozone crisis
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