Germany 2016 OECD Economic Survey investing in the future Berlin 5 April

1. 2016 OECD ECONOMIC
SURVEY OF GERMANY
Investing in the Future
Berlin, April 5th 2016
@OECD
@OECDeconomy
http://www.oecd.org/eco/surveys/economic-survey-germany.htm

2. The economy has rebounded strongly
1.Euro area countries which are OECD members.
2.Includes Denmark, Sweden, Switzerland and the United Kingdom. They are weighted on the basis of GDP at 2011 purchasing power
parities.
Source: OECD (2015), OECD Economic Outlook 98 Database, and OECD calculations based on OECD Economic Outlook 98
Database and on Main Economic Indicators Database. 2
90
92
94
96
98
100
102
104
106
108
110
2007 2008 2009 2010 2011 2012 2013 2014 2015
2007=100
Germany Euro area¹(15)
European high-income
economies outside the euro area²
USA

3. Well-being is good
3
Note: Each well-being dimension is measured by one to four indicators from the OECD Better Life indicator set. Normalised indicators are
averaged with equal weights. Indicators are normalised to range between 10 (best) and 0 according to the following formula: (indicator
value – minimum value)/(maximum value – minimum value).
Source: OECD (2015), OECD Better Life Index.

4. The unemployment rate is low
1.Euro area countries which are OECD members.
2.Includes Denmark, Sweden, Switzerland and the United Kingdom.
Source: OECD (2015), OECD Economic Outlook 98 Database, and OECD calculations based on OECD Economic Outlook 98 Database and
on Main Economic Indicators Database.
4
2
3
4
5
6
7
8
9
10
11
12
2007 2008 2009 2010 2011 2012 2013 2014 2015
% of
labour force
Germany Euro area¹(15)
European high-income
economies outside the euro area2
USA

5. 5
The gender earnings gap is very wide
1.Defined as the difference between male and female median labour earnings (not adjusted for hours worked) divided by male
median labour learnings.
Source: OECD (2012), Closing the Gender Gap: Act Now.
0
10
20
30
40
50
0
10
20
30
40
50
SVN HUN SVK FRA SWE BEL CZE USA IRL LUX AUT KOR DEU NLD
%% Gender earnings gap1 for all workers
In Germany this mostly reflects few hours worked by women.

6. Investment is low
6
0
2
4
6
8
10
12
14
16
18
20
0
2
4
6
8
10
12
14
16
18
20
ITA GBR DEU FIN DNK NLD FRA USA IRL BEL AUT JPN CHE SWE
% of GDP% of GDP
Note: 2013 for Japan and Switzerland.
Source: OECD (2015), OECD National Accounts Database
Non-residential investment as % of GDP,
2014

7. High corporate saving contributes to the
large current account surplus
7
Source: OECD (2015), OECD National Accounts Database.

8. 8
The number of immigrants and registered
asylum seekers has risen strongly
Source: Federal Statistical Office and Federal Office for Migration and Refugees

9. RAISING INVESTMENT AND
PRODUCTIVITY
9

10. Service sector productivity is low
 Remove barriers to competition in professional services and
network industries. 10
Source: OECD (2015), OECD Productivity Database and OECD National Accounts Database.
80
90
100
110
120
130
140
150
80
90
100
110
120
130
140
150
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
1997=1001997=100
Gross value added per hour worked, constant prices
Manufacturing Business services

11. 11
Business services account for most
investment
Investment spending as a share of total economy value added
Note: Investment includes only new fixed capital goods. It excludes adjustment for net sales of used capital goods.
Source:OECD (2015), OECD National Accounts Database.

12. 12
Regulation in professional services
is restrictive
1.Average of all OECD countries excluding the United States. For the panel B, the Slovak Republic and Slovenia are also excluded to calculate the
OECD average in 2008.
Source: OECD (2015), OECD Product Market Regulation Database.
Regulation of professional services,
Index scale from 0 to 6, from least to most restrictive
 Eliminate price regulation, review compulsory membership in the
professional chambers, reduce exclusive rights (for example for
notaries), ease restrictions on firm ownership and on advertising.

13. 13
Complex regulation hampers
entrepreneurship
1.Average of all OECD countries excluding the United States. For the panel B, the Slovak Republic and Slovenia are also excluded to
calculate the OECD average in 2008.
Source: OECD (2015), OECD Product Market Regulation Database.
Complexity of regulatory procedures,
Index scale from 0 to 6, from least to most restrictive
 Further simplify administrative procedures. For example apply the
“Silence is consent” rule more generally when issuing licences and
strengthen e-governance.

14. 14
Investment in knowledge-based capital
is low
Business investment in knowledge-based capital
Per cent of business sectors’ gross value added, 2013
Source: OECD (2016), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society.
 Reduce government ownership in the business sector and avoid
incumbent bias in policy making.

15. 15
Net investment of local governments
has fallen
Source: OECD (2015), OECD National Accounts Database.
 Provide more support to good municipal investment projects,
including by strengthening administrative capacity.

16. 16
Supply of high speed (fibre) internet is low
Rollout of broadband by type of technology
Fixed broadband subscriptions per 100 inhabitants, December 2014
 Target government support to the roll-out of fibre networks.
Estimates for Israel, Switzerland and the United States. Preliminary data for Mexico.
Source: OECD Science, Technology and Industry Scoreboard 2015.

17. WELL-BEING AND
DEMOGRAPHIC CHANGE
17

18. 18
The society is aging
Projected employment and population trends
 Index the pensionable age to increases in life expectancy.
 Enroll everyone in occupational pension schemes by default, with
an opt-out option.

19. 19
Immigration can delay population aging
Note: The assumptions of the 'baseline (net immigration 200 000)' scenario include a constant birth rate of 1.4 children per
woman, a moderate increase in life expectancy at birth to 84.8 years for men and 88.8 for women in 2060, and a gradual
adjustment of net immigration from 500 000 in 2014 to 200 000 in 2021.
Source: OECD (2015), OECD Population Statistics: Historical population data and projections (1950-2050) (database) and
Statistisches Bundesamt.
Those below 15 and above 65 years old relative to those 15-65 years old

20. 20
Immigrant youth have poor education
outcomes
Difference in mathematics score between native born and immigrant youth
 Improve training and recognition of immigrants' skills.
 Ease access to the labour market for asylum seekers who are
likely to stay. Include them in active labour market programmes.
Source: OECD (2013d), PISA 2012 Results: Excellence through Equity, Giving Every Student the Chance to Succeed, Vol. II.

21. 21
The tax burden on labour is high
Income tax and social security contributions,
as percentage of labour costs, 2014
Note: Income tax plus employee and employer contributions less cash benefits of a single, no child, full-time worker earning
67% of average earning.
Source: OECD (2015), Taxing Wages 2015
 Shift the tax burden from labour income towards real estate and
consumption.

22. 22
The tax system discourages full-time
employment of second earners, mostly women
-4
-2
0
2
4
6
8
10
12
14
-4
-2
0
2
4
6
8
10
12
14
ISR
GRC
MEX
NLD
CHL
FIN
GBR
TUR
KOR
SWE
NOR
JPN
POL
ESP
FRA
AUT
ITA
EST
HUN
CHE
USA
DNK
PRT
SVK
BEL
CAN
AUS
DEU
CZE
LUX
IRL
ISL
SVN
NZL
%%
The average tax rate of two-earner families minus that of one-
earner families, 2014
Note: The bars show the difference between the tax wedge of a two- and one-earner families. The main earner earns the average earnings and
the secondary earner earns 67% of the average earnings in a family of a married couple with two children. The tax wedge is the sum of personal
income tax, employee plus employer social security contributions together with any payroll tax, minus benefits as a percentage of labour costs.
Source: OECD (2015), "Taxing Wages: Comparative tables", OECD Tax Statistics (database).
 Introduce a separate tax-free allowance for second earners. Relate
health insurance premiums to the number of adults in a household.

23. 23
Few people work beyond the age of 65
0
10
20
30
40
0
10
20
30
40
ESP
SVK
HUN
BEL
FRA
GRC
LUX
ITA
POL
CZE
AUT
DEU
FIN
SVN
NLD
DNK
IRL
NOR
GBR
SWE
TUR
PRT
CHE
CAN
EST
OECD
ISL
USA
ISR
AUS
NZL
JPN
CHL
MEX
KOR
Percent of 65-74 year-olds in the labour force, 2014
 Raise the pension premium for workers who decide to retire later.
 Strengthen life-long learning, especially among workers with
vocational degrees.
 Strengthen financial incentives for enterprises to prevent health risks.
Source: OECD (2015), OECD Labour Force Statistics (database).

24. 0
100
200
300
400
500
600
700
800
900
1000
0
100
200
300
400
500
600
700
800
900
1000
NOR
AUS
NZL
ISL
CHL
FIN
SWE
IRL
MEX
CAN
FRA
LUX
ESP
ISR
DNK
CHE
USA
PRT
AUT
GBR
TUR
EST
NLD
SVN
KOR
JPN
DEU
BEL
ITA
POL
CZE
SVK
GRC
HUN
24
Local air pollution is harmful to human
health
Annual deaths from air pollution
Per million inhabitants
Source: OECD(2014), The Cost of Air Pollution
 Eliminate tax exemptions for environmentally harmful behaviour.
 Tax cars according to their NOx emissions and tax large NOx
emitters.

25. 25
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http://www.oecd.org/eco/surveys/economic-survey-germany.htm
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