Germany Economic and Financial Policy in the Early 2000's

Germany Economic and Financial Policy in the Early 2000’s

During 2005, the government continued along the path taken by the previous administration for the implementation of structural reforms in the labor and real (goods and services) markets and fiscal policies aimed at promoting economic growth through export support, driving force of the German economy, and to domestic demand. To promote employment and reduce structural unemployment, various active employment policies have been implemented: the system of subsidies has been revised in order to facilitate the transition of the unemployed towards self-employment; the local authorities have been entrusted with the responsibilities regarding placement; subsidies to the long-term unemployed have been extended. On the goods market, the greater competition between economic operators was pursued by reducing the restrictions on advertising in the liberal professions, starting the gradual process of privatization of telecommunications and postal services and making the system for disbursement of public funds for research and innovation more effective. During 2007, the revision of the structure of the tax system, in particular with the tightening of indirect taxation and the reduction of insurance contributions to be paid by the employer, helped to consolidate the international competitiveness of German companies. In this period, the authorities also took on the responsibility of the consolidation of public accounts, which was mainly pursued with the decline in state spending: wages were reduced, the number of employees in the public sector stabilized and social security payments and benefits reduced. In conjunction with the economic and financial crisis, the government, on the strength of the positive results achieved in the financial consolidation process, was able to carry out an ambitious fiscal stimulus maneuver to support private consumption and investments, favor the improvement of financial conditions and the resumption of trade.

In the labor market, the introduction of flexible measures to support companies which were forced to reduce the working hours of employees as a result of the economic situation has helped to contain unemployment. In the goods market, on the other hand, a regulation was passed aimed at encouraging the national production of electricity and at the same time promoting internal competition in the energy market. In the transport and telecommunications sector, the restrictions on access to infrastructure networks have been removed and the conditions of competition between operators have generally been guaranteed. As regards the services market, the professional rates of architects and engineers have been gradually liberalized.

During 2011, according to mbakecheng, the German authorities launched a new economic policy maneuver aimed at sustainable growth, pursued with the reduction of public spending, the decrease in subsidies, the redefinition of social benefits and a more efficient placement system. In addition, the public health insurance system was reformed during this period with the aim of promoting competition in the health insurance market and preventing the increase in labor costs due to health contributions, while the pharmaceutical sector was subject to a complex intervention of a structural nature that redefined the criteria for determining drug prices. To consolidate the internal financial market, the government has launched a program aimed at containing financial risks for the economy and public finances: the supervisory authorities have been given greater power over banks deemed insolvent and the obligations for banks in collaboration with the authorities have been clarified to prepare emergency plans aimed at restructuring and recapitalization in the event of a crisis. Finally, in 2014, important new interventions were made on the labor market, including the introduction of the minimum wage to support, above all, underpaid workers in the service sector and the lowering of the retirement age to 63 years.

Germany Economic and Financial Policy in the Early 2000's

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