of germany's best known economics institute does forget, you can find lots more news analysis and video on a website that is d w dot com. i'm reading them home. it's thanks for watching. i'll see you soon by the vacation as an applicant, do they have good was i when i told me that they don't have to do this, and we go say, tulsa tissue today, because then they go to that. who set up the video mill. stuff was what car bama can install the ice or not because the world in progress as tough calls to everyone who wants to know more about this topic. that concerned about this story is beyond the

headlines world in progress. the w cost cost, the farmers blocking roads trains at a standstill, the worst performing major economy in the world last year. not to mention a 17000000000 the euro hole and it's, but just germany wants to beacon of europe and fiscal stability is struggling to help us understand. fly. i'm showing that if i came in 1st, president of the full economic research institute on a close washer of the german economy most are fools. how does we get into this mess? i think it's a combination of factors of cost,

the dom an economy was skipped very hard by the energy crisis by the fall out of the russian attack on ukraine. the country has managed to adjust to that more or less, but it has kept us in recession and ma with finding it difficult to get out of this recession and business related to a number of factors. one being that in the more medium time manner, some of our key industries are in a difficult transition. the car industry with electric mobility bind with high energy prices. the chemical industry is traveling. so it's a number of factors. some of them a home made like high taxes more and more bureaucracy. and all these factors are a bit much now. and perhaps, unsurprisingly then a lot of people are feeling very discontent. the farmers are angry. rail workers are on strike again. our german wages to low is not what this is about. a german wages are rising at the moment, so wages as such,

are not relevant for farmers but uh for uh, trained drivers. yes. but german wages are actually rising quite quickly. so in a way, it's surprising that this is not driving consumption, and one explanation would be that people are not so confident about the future and save their incomes rather than consuming them. so that is one factor, and it's related to this question. yes, we have managed these short term crisis spots. so the what is lacking is a longer term perspective for returning to economic growth. that's what's electric . or i want to talk about some potential solutions a little bit later, but staying on that issue of work, or is because one of germany's biggest problems right now is that it doesn't have enough of them. here is a charge. the eco institute produced, which shows the extent of that problem. you can see the breakdown of sectors of the top on the share of companies that say they are in need of work or is there mr.

foods? the skills storage is one thing, but that of course comes on top of the fact that german society is aging very fast . what do you think needs to be done to stabilize the labor market? one thing is that the workforce is aging and shrinking, and particularly in the coming years about to another factor is that if you look at i was walk, we see that or not people go on pop time, walk and hear the good news is we can do something about it. so currently, a social transfer and text system created strong incentives toward few hours now just to pop time and by reforming, but we could get them all people again to work full time of calls there of the effect of child care doing multiple immigration. so there was a number of reforms that could help here. but just to clarify, are you saying then one of the biggest problems is that the german workers are working enough? correct. if you look at individual work hours,

they have decline significantly. over the past years, we shouldn't forget, we have 46000000 people in the walk. false. that's a record. at the same time, everybody's complaining about not finding enough employees. how come back be? you know, the answer is if we look at what hours uh, the number of walk hours hasn't really increase the number of employees. yes, but individual walk time has fallen on very strongly and that explains why there is such a shortage of labor supply. so if you are all of choice, how would you sell that to the electress. i think this is an easy sell. in fact, i would say we need to reform all tax and transport system. so the people who work mall also have higher than that the income is current leave for a significant part of the population. it doesn't pay very much when people walk

them off because they lose social transfer. they pay very high taxes um, by reforming that. we can generate more employment with out of great costs to the government. so i really think this is one of the few areas where we almost have a free lunch and we should eat it if it's free. well, there is the cost of a free lunch, but at the same time, there is a $17000000.00 euro hole in germany's budget. i'm how are we going to fix us? while the government has decided to fix that through some, let's say budgetary maneuvers, but also increases in some taxes. and uh, i think what's behind that is a big a problem. and that is a lack of public and private investment in germany that has been around for some time. and i think to fix that, we need a major step. my preferred solution would be

a consensus with the opposition and an adjustment in the constitution that would or would create a new investment fund for a longer period of time. so digitize ation the carbon isaiah and infrastructure. we need investments here and we should come up with some kind of a longer term plan to make sure that this investment happens. ideally, this should go along with cuts in public consumption spending about the part of that also has to be financed through debt. so in other words, an end to germany is debt break. not at all i. we could preserve the debt brackets, a bit complicated. we can present the debt break, but create a special from the debt break, leaves the room fall that create a special fund for these investments. uh the, the hurdle is you'll need to to 3rd majority in the parliament fall that i wouldn't dismiss, but that break the debt break has proved to be very useful because it forces politician to really discuss priorities in spending. robin financing everything and

solving our conflicts through debt. so i think the debt break is successful, it just has this problem, but we now have some investment needs and the debt break says, yes, you can do that. you can go into debt, but you need to 3rd majority for that. i want to look at the prospective of employers now because the head of germany's employer is association k. might this very weak with a very strong statement. he said, we must be careful not to go from being the adage and also european union to a museum of prosperity. we employers have lost trust in this government. our neighbors looked at us with more concern than we do mister false, your reactions thought statement as well. i think partly this statement is justified, a bought only probably because it's a bit exaggerated. i think the government has managed the energy crisis quite well

so far. so we have them pat costs and gas troll judges, and i think that should also be a knowledge, but i support this statement in the sense that yes, we do lack a convincing strategy for economic growth. and our government doesn't even have a consensus that it wants to have growth. so there are parts of the government saying no growth is not so important in general. we should focus more on climate change. and i think that's a seriously misguided concept. so the government needs to get its act together and present apply, and that allows us to deal with the challenges that have like a labor shortages. the carbonized ation, the problems with infrastructure. so this growth crime is lacking and mr. druggist said, we need to get our act together and do something about it and i think it's right in that regard. okay, well, let's talk about how to get our act together. um, the country's economic power. germany has traditionally been in the also most of

chemicals and engineering sectors, but these are all areas that are both energy intensive and they're also export reliance. so let's look at germany's ron king when it comes to innovation, because it is not exactly at the top of its game. as you can see here, it's trailing behind the likes of switzerland, sweden, the u. s. u k and singapore coming in as a right number ace. over all mr. post, we're talking solutions here. what does germany need to do to become more innovative, more ready for the future? the innovation is key indeed, and germany has been quite good at innovation, but it's more about what's called modern and innovation. so improving, causing them all, getting better machinery and germany has struggled more with the being successful in disruptive innovations. in new technologies, we need to do something about that with so we need to invest more in research and

development, but we also need to create better conditions for mudy crated companies. if you look at the number of annuity created, the companies a germany is weaker, he a lot weaker than the us. everybody knows that, but also a week of then the okay, so we need to create better conditions, fall of the creation of new companies that has to do with capital markets with the tech system and so on. and we also need to create better conditions for our existing companies to innovate in germany does have a lot of very successful industrial companies, even outside the automotive industry. the so called hidden tompkins, but they are held back by bureaucracy, a lot of bureaucracy by high taxes, the by a lack of qualified employees. and we need to do something about that and create better conditions for them. and if we do that, i think we'd also be better in innovation. you mentioned earlier that parts of this german government are more interested in talking in climate change then and

promotion growth. i'm wondering, do you think those 2 things are possible to achieve at the same time? and it said necessarily wrong to focus more on climate change that on economic growth. i think it's wrong to pitch one against the other. it's wrong to say we don't want to grow genuinely anymore. we want to focus on climate change. it would be correct to say yes, climate change needs efforts that will reduce growth or at least require some sacrifice in terms of consumption, but to be able to deal with that. we need mall growth more economic growth, not less. we need to be more effective. we need to have better walk in sense if we need to innovate small, grow more about the grow and then environmentally friendly way. that's the message . i think it's seriously misleading to say, oh, let's forget about this focus on growth and the focus. more on climate change is nobody will follow, germans will follow europe if we go down that route and nobody in the world would

like that strategy. so we have to demonstrate that we can reconcile the climate change with economic success. but we also have to be open about the fact that yes, some sacrifice in terms of consumption will be needed, but we need to show that. so it could all make success can be combined with climate protection. if we don't other countries, we'll say we focus on growth and forgot the climate that would be very bad. the butts view will tell you who we are happy that we are back to the story.

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