Friday, April 20, 2012

Economically troubled nations: be like Germany

David Olive, Opinion, The Toronto Star:

That Germany is an oasis of prosperity amid the economic wreckage of Europe is no secret. That the world’s fourth-largest economy, and by far the largest in Europe, is outperforming the U.S. and Canada, as well, has been a topic of a fascination that would be more pronounced if only we weren’t understandably preoccupied with austerity-driven riots in Athens, across Britain, and in a Madrid where the jobless rate is 20 per cent and youth unemployment is running at 40 per cent.

Germany’s economy will grow this year, while most of the rest of Europe has slipped into recession. German civil servants received a bonus last year, while governments at every level across North America and Europe are cutting government jobs – many of them essential-service jobs – or slashing the pay and benefits of those still on the payroll and forced to do the work of their laid-off colleagues.

Germany, an export-driven economy like Canada, retains its export prowess to such a degree that both Volkswagen AG and Daimler AG posted record profits in 2011, despite a slump in the European auto market. The German jobless rate is about 5 per cent, compared with 7.2 per cent in Canada, and 8.2 per cent in the U.S.

German industry is no less productive and innovative than its top peers, including Korea, Japan and the U.S. Yet organized labour in Germany has long had a significant role in corporate governance, as members of corporate supervisory boards. And Germany has long required employers to provide mandatory five-week vacations to workers.

Germany’s public finances are as sound as those of Canada and Switzerland, and the envy of a U.S. and Britain that are struggling with their public indebtedness. Yet Germany is an unapologetic welfare state, with a social safety net more elaborate than any outside Western Europe.

Germany has been showing us how to run a country that can take care of its people in good times and bad, and help rescue others as well.

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