KFW alerted according to the report
“era of declining prosperity” threatens
1/23/2023 7:37 am
If nothing changes about the shortage of skilled workers and weakening productivity in German companies, our prosperity is likely to shrink again. According to estimates by KFW, there will then be a threat of distribution battles – as never before in the post-war period. The experts see the solution in women and immigrants.
The state development bank KFW warns with unusually clear words of an economic turn to the negative in Germany. According to an analysis previously reported by the FAZ, the foundation for further growth in prosperity is crumbling. The KFW experts see the decline in the supply of skilled workers and the weak development of productivity in companies as a threat. If nothing changes, Germany will enter an “era of persistently stagnant, possibly gradually declining prosperity” before the end of this decade.
“Increasing distribution conflicts and increased competition for the use of scarce resources” are to be expected. KFW chief economist Fritzi Köhler-Geib warns in the newspaper of a problem of historic proportions: “The combination of long-term shrinking domestic labor supply and weak productivity development represents a unique challenge that is new to us in the post-war period,” said the economist.
The experts at the development bank see three recipes for averting the misery: first, get more people into work in Germany, second, attract more immigrants to the country, and third, increase labor productivity. None of these adjustment screws alone can solve the problem. For example, net immigration would have to increase from 330,000 people in 2021 to 1.8 million working-age immigrants per year if this lever alone were used to close the gap. “Net immigration of this magnitude seems unrealistic,” says the study.
Women should work more hours
Specifically, KFW is campaigning for a whole range of measures. In order to increase the employment rate in Germany, the cultural and financial hurdles for women, which have so far prevented them from working more hours, must be dismantled. “A reform of spouse splitting that makes it financially attractive for both spouses to take up work would reduce the false incentives,” says chief economist Köhler-Geib.
According to KFW, in order to integrate more immigrants into the German labor market, it is necessary, among other things, to offer them German courses more quickly so that they can gain a foothold in the profession more quickly. The recognition of qualifications obtained abroad must also be made easier.