Germany's Strong Economy: Two of Its Key Elements

For several decades, Germany has led the nations of Europe in various economic indicators. Through rising and falling business cycles, the wax and wane of employment rates, inflation and recession, and the other usual ebb and flow phenomena of finance, Germany remains at or near the top of the list.

Why is the German economy so successful?

The answer is multi-factorial. Writing for Newsweek in July 2014, Rose Jacobs identifies labor policies and a strong manufacturing sector as two of the elements fueling Germany’s growing economy:

Where French unions and companies go at each others’ throats over working conditions, Germany has loosened labour laws just enough to encourage hiring, helping push down unemployment to record lows today. And where the UK waxes nostalgic about its manufacturing past, Germany – which faced the same market forces over the past 40 years that prompted Britain to shift towards a service economy – today boasts higher export figures for high-tech products than any country on earth.

While German workers are well-paid, productive, and enjoy good working conditions relative to their peers in Europe and North America, the relationship between management and organized labor is less combative.

While other nations have moved steadily toward a service economy, Germany has retained a healthy manufacturing base. Germany still makes money by building products and selling them both domestically and abroad.