German elections which will take place next Sunday will see a new victory for Angela Merkel. The only uncertainty is about its magnitude and the necessity she will have –or not- to constitute a coalition and with whom. An alliance with the Greens is the less likely hypothesis, even if she gave them token in getting out of nuclear power and in committing her country in an energy transition program which satisfies them. The likely comeback of the FDP, which missed the 5% barrier during last election in 2013, into the Bundestag opens the door to a “Small coalition” as during the 2009-2013 years. They asked for the appointment of one of their members as finance minister and showed a strong opposition to the ECB policy. That would restart tensions inside the eurozone at a time when Angela Merkel whishes to strengthen it and finds with Emmanuel Macron a credible partner. The renewal of the “large coalition” with the SPD would facilitate the achievement of her European project but it will depend of their performance. A too heavy defeat would weaken the credibility of the new government in Germany. So is the dilemma the Chancellor is confronted with. But her electoral success will essentially express her country economic success which was, we forgot it, during the fifteen years which followed the reunification “the sick man in Europe”. Is it a transposable model? The issue is crucial since in France it is constantly asked for ten years.
Our neighbor success is, from outside, indisputable in three areas, employment, public finance recovery and the accumulation of huge trade surplus. But that success is frequently apparent and it is the result of non transposable situations. It is first true regarding employment. The very low level of unemployment is mainly the consequence of a critical demographic situation. Birth rate is 1.3 compared to near 2 in France. So there are more people in Germany going into retirement than young coming on the job market. In France, to stabilize unemployment, it is necessary to create near to 250 000 jobs a year when in Germany, it is the opposite. The massive arrival of migrants in 2015 and 2016 did not feed that gap, even if those who did not find a job are not included, for administrative reasons, in unemployment figures. Another factor is women low employment rate. They have part-time jobs more frequently than in France. That kind of work-sharing contributes to reduce the unemployment rate. At last, the famous “Hartz reforms” have permitted to dissimulate, through very low working time contracts and low remuneration the under-employment which was still high in the Eastern provinces. The purpose of these reforms was to impeach a rebound of the migrations in direction of the prosperous Western provinces. It is not any more disputed that this policy has increased inequalities and developed poverty in contradiction with the historical model of “shared prosperity” initiated by Chancellor Erhard in the Sixties. So the success of the employment policy in Germany lies on situations which cannot be transposed to other countries and it would be wrong to take inspiration from these artificial remedies.
Successes in public finance should also be put into perspective. A large part of the indebtedness gap between France and Germany is due to the low level of defense expenses in the German side. The difference each year is about 0.5% of the GDP. Cumulated on the last twenty years, it represents half of the difference of public indebtedness between the two countries. As another reason, there is again demography. Children number has stagnated during a long period of time and is even declining now in the other bank of the Rhine when it is increasing in France. National Education expenses are impacted. At last, even in Germany it is admitted that the level of public investments, notably in infrastructures, is insufficient. For more than ten years, Berlin tries to put into activity its new airport and can’t do it. But that doesn’t explain everything. Just after the financial crisis, Germany has chosen, to reduce public deficits, to increase VAT. The intensity of the competition between enterprises has impeached a full repercussion on prices paid by the consumers. The State took profit of that. France could take notice of it, instead of reducing social benefits and freezing the wages of civil servants.
Foreign trade success is spectacular but its reasons are wrongly understood in France. An analysis would permit to avoid many mistakes and to correct a situation in France which has not been improved by measures which have been decided in the past and which are still in application. German success is not resulting from “working costs” which would be more favorable there. Employees of major exporting groups, as the car or the mechanical industries, have even higher wages than in France, even in taking accounts of the diverse taxes which are affecting remunerations here. Employees are not working longer, contrary to what has been said about the damages caused by the 35 hours week. On the other hand, flexibility regarding both working time and part time to adapt to demand fluctuations are well accepted by employers and trade unions. It permits to keep inside the enterprise their know-how. It is an advantage. In France, in giving fiscal incentives to overtime hours and in missing to manage necessary adaptations to the fluctuations of the order book, everybody is a loser. The other essential difference lies in major group strategies and in their elaboration to which labor unions have been associated through their active presence in management boards. It was instituted in Germany by a 1976 bill. That is the real reform which should inspire the government in France. That participation has certainly played a role in avoiding massive relocations to which most of the time trade unions were opposed. On the contrary, in France, they were not even consulted. Sub-contracting mainly with Eastern-European neighbors has been encouraged but most of the value-added has been kept on the national territory. The ratio between German company exports and their national production is almost twice higher than in France. It is also true, but at a lesser extent for Italian companies.
At last, it is not possible to ignore the radical difference between French and German consumer behaviors. The last one have for a long time understood that it was in their interest to give a preference to what is produced in their own country and to promote all around the world its quality. It is not a patriotic issue or a sacrifice but a base of the German prosperity. But in that case, we are not talking about public policies but about some teaching skill. Politicians from any side could work on doing that. And, on that matter, Germany is a real reference when, for instance, Angela Merkel supports its car industry, confronted with the worst scandal. That does not have anything to do with her political successes.
Germany is of course a model for German people but not for France, except in some specific cases. Our political leaders and our fellow countrymen could take inspiration from it once they have understood the point.