The federal government still has one month to implement an announcement in the coalition agreement. “In dialogue with business, trade unions and associations, we want to forge an alliance for transformation and discuss stable and reliable framework conditions for the transformation in the first six months of 2022.” That’s what the coalition paper says, and it’s also confirmed by Chancellor Olaf Scholz ( SPD) these days at the Hanover Fair, which he opened on Sunday evening and which begins this Monday with the traditional tour of the German head of government.
Transformation is the headline for the decarbonization and digitization of the economy, especially industry. Energy efficiency is also the number one topic at the world’s largest industrial show in Hanover. The consequences of the attack and the debate about safe energy made it all the more clear that the economic transformation had to be advanced, said Scholz at the beginning. This requires new procedures and processes. “This trade fair shows that this is possible and that we will make it at great speed.” Actually, the “Alliance for Transformation” should be in place by Easter. But the war changed everything, and in industry, the promised alliance is now referred to as a “white elephant” in the chancellery – a synonym for something big and invisible. A nothing.
Time is running out. By the middle of the year, for example, the steel industry, one of the biggest emitters of CO2, wants clarity about the legal and financial framework that is needed to implement the investment plans to decarbonize steelworks. Around 30 billion euros are estimated for this – that doesn’t work without politicians and taxpayers. Everyone agrees on the goal: Germany should also be an industrial country in a climate-neutral economy. Because the industry stands for export strength, innovation and well-paid workers as well as high government revenues.
Almost a quarter of employees in Germany earn their living in industry. Wages are higher than average here: in 2020, 30 percent of the total wage bill went to 24 percent of the workforce. One reason for this: “Productivity in industry has increased by 112 percent over the past 30 years,” according to a study by the Institute for Co-Determination of the trade union Böckler Foundation. The dramatic job cuts in the 1990s are history. Since reunification, the number of people employed in industry has fallen by 24 percent or 3.2 million. The low was reached in 2006 with 9.2 million, in 2020 it was more than ten million again, according to the report on the economic importance of the industrial sector in Germany.
Basically, in the developed economies, the importance of the service sector is increasing compared to agriculture, forestry/fishing and the industrial sector. But in Germany, with its strong vehicle and mechanical engineering, chemical and basic materials industries, the share of the manufacturing sector in the overall gross value added is higher than in France, Great Britain, Brazil, the USA, Italy and Canada. “The rate in 2020 was only higher in Japan, South Korea, Russia and China,” says the study.
The Federal Republic takes a “sandwich position” between the emerging countries and most industrialized countries. In the “unique balance and equilibrium of the German economic structure” lies the “central strength and the main competitive advantage of the German economy”. The industrial companies obtain almost a third of their inputs from the service sector. “As a buyer of intermediate consumption, the industrial sector makes a significant contribution to the production value of all three economic sectors,” write the authors. According to the analysis, industry was and is “responsible for a large part of the gross investments in the German economy” – in 1991 for 87 percent, in 2020 for 72 percent. During this period, the investment volume increased by 233 billion euros, private and state consumer spending on industrial goods by 205 billion euros. Industry also dominates exports: in 2020 it accounted for 76 percent of all exports, in 1991 it was 85 percent. Their external contribution, i.e. the balance of exports and imports, has grown continuously since 1991 and has consistently contributed more than 60 percent to the overall economic external contribution.
Industry made a “significant contribution” to government revenue in 2020 in the form of production and import taxes totaling 42 billion euros. According to the study, the manufacturing industry received the least amount of subsidies of all three sectors at seven billion euros; their share has fallen from 29 to 18 percent since 1991. According to the researchers, the net production taxes – the difference between payments and subsidies – are ahead of the services with 33 billion euros at 35 billion euros. In order for the industrial sector to survive the transformation well, it needs “political support”, for example with “the introduction of climate-friendly but initially very expensive new technologies”.