Economic Development in August 2012
Domestic Affairs:
Economic Development in August 2012
Domestic Affairs:
• Germany’s population increases – by 92,000 to 81.8 million – for the first time since 2002, mainly as a result of a significant increase in immigration. It’s only a tiny 0.1% increase but it could be the breakthrough. Germany has increased its attractiveness and become a magnet in Europe – however the hurdles for immigrants are still high.
• Labour market figures for July : Jobless figures rise 67,000 to 2.87m, but labour agency boss Weise stresses that this does not mark a downward shift in trend.
• The Federal statistics office publishes figures showing that around 7.4 million people in Germany wanted to work more in 2011. Meanwhile former SPD economics minister Clement wants the maximum working age to be abolished – Clement says anyone who wants to and is able to work until they are 75 or 80 should be allowed to do so.
• State revenue surplus : For the first time since 2008 all levels of German government achieved a collective budget surplus (of €8.3billion) in the first half of the year. This was largely down to the healthy state of the economy, and in particular the rise in the level of employment – profits in pensions, health and unemployment insurance have boosted the figures considerably. By contrast, the Federal government taken by itself recorded a deficit of €6.9bn, despite increasing its tax revenue. Editorials are critical that the Federal government is not doing more to use the good state of the economy and reduce the deficit.
• Experienced employees needed : More and more companies are getting retired employees to return to work because they cannot cope without their experience. BILD Editorial Bosses are realizing that increased immigration won’t solve the skills gap. Youngsters are quick, but they don’t know the shortcuts.
• Deutsche Bank to cut 1,900 jobs : Ackermann reportedly calls successors “losers” Süddeutsche’s headline story reports Deutsche Bank said Tuesday it plans to cut about 1,900 jobs, most of them outside Germany, as European debt crisis hurt profits at its investment banking business. The bank, which employs nearly 101,000 people, said second quarter earnings decreased 46 percent to EUR 661 million from EUR 1.233 billion in the same three months a year ago.
• Bild interviews former chancellor Schroder about the Agenda 2010 reforms. Schröder insists that the low unemployment figures “are not a result of this Federal government. He says the Fed gov. needs to make moves to introduce a minimum wage. He also calls for more investment in childcare and education.
• Pension : The Labour Minister von der Leyen couples her plans for a supplementary pension with the announcement of a cut in pension contributions from 19.6% to 19%, which should enter into force in January 2013. The supplementary pension reform however won’t come into force until July. The Cabinet is set to vote on the package on 28 August. She had hoped to secure the FDP’s approval of her reform with the announcement of the contribution cut, but Rösler (FDP) expresses his skepticism, saying that such an important topic needs to be discussed thoroughly. The economics ministry believes the contribution cut could be agreed on its own – without von der Leyen’s supplementary pension reform.
International Affairs:
• Merkel and Monti agree to take all necessary measures to protect Eurozone: FAZ’s headline story Monday writes that despite the fact it is the summer holiday season, European politicians conducted crisis-diplomacy in light of ongoing concern over developments in the Eurozone. FAZ report Chancellor Merkel (CDU) and Italian Prime Minister Mario Monti agreed Saturday that Italy and Germany would take “all necessary measures to protect the Eurozone.” The Chancellor also invited Monti to meet in Berlin in the second half of August.
• Companies shifting capital out of euro zone: the Times report noting that Shell is looking to invest $15 billion outside the euro zone because of fears for the currency’s future. Further companies like Vodafone and Glaxo Smith Kline are evidently following Shell’s example. Senior British managers in particular are talking openly about how they are insuring themselves against the risk of the euro collapsing. For German business the issue is thorny, and BDI president Keitel says “any backward step in European integration would spell incalculable risks for economic and political stability” FTD comments what is unusual is that Shell is speaking so openly about withdrawing its euro cash reserves. Until now companies were tending to keep quiet about such shifts.
Office of Labour Affairs, Royal Thai Embassy, Berlin August 2012
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