How Is Germany The Largest Economy In Eurozone

It is no mystery that Germany is reeling from a political turmoil, however, it’s their constantly mitigating unemployment rate that is giving the inhabitants a reason to rejoice.

In April this year, the number of unemployed natives fell by 74,358 for a total of 2.38 million jobless. And in March this year, Germany’s unemployment rate hit a record low at 5.3%, said to be one of the lowest since German unification in 1990, saliently reflecting the robust disposition of labour market that is the key driver of this economic upswing. This data augurs well for their already strong economy, extolled to be one the strongest in the Eurozone. 

As presciently observed by the German Federal Labor Agency (BA), the thriving labour market is likely to continue with the upward trend of supporting a consumption-led growth cycle in the Eurozone powerhouse. Furthermore, exports that are witnessing a regular upward trajectory and increased company investments are acting as additional growth drivers. Some say it is Germany’s supreme leader Angela Merkel who has led the country to robust economic growth and low unemployment rates. 

Down The History Lane 

It is astonishing to see that a country where people work fewer hours than almost every other country globally is not only leading in the terms of economy and employment but is also the world’s largest exporter.

However, it wasn’t always the case. A stalwart German economist once coined an eponymous term “Eurosclerosis” to define the sluggish streak of the country’s economy from the 1980s through the 1990s. In the lates 2000s, Germany was inflicted with an unemployment rate that transcended well beyond 10%. But after a decade or so, Germany had a remarkable volte-face in their economy and employment rate. 


Economic Structure Of Germany  


The Bundestag – German Federal Parliament

Unemployment would have been plaguing the country had the government not launched the reforms between 1998 through 2005. To alleviate the ongoing economic crisis, the government subsidised businesses to a huge extent. 

Firstly, Germany owes its gargantuan economy and the low unemployment rate to its mixed economy. On the top of that, it allows a free market economy in consumer goods and business services. However, the government imposes some regulations to protect the citizens.

Secondly, Germany astutely forsook Deutsch Mark in favour of Euro which resulted in low-interest rates and spurred investment. If rumours are anything to go by, Germany profits the most from the European Union membership. Its competitive advantage over other EU nations stems from its massive manufacturing base which allows it to carry out low-priced export arrangements.

Thirdly, Germany has espoused the practice ofsocialist market economy which lets every citizen enjoy the benefits and people with higher income are expected to pay more taxes. Furthermore, Germany has an incredible system of apprenticeship which allows the students to acquire vocational skills as an alternative to the traditional university system. 

Today, many nations want to imitate Germany’s manufacturing prowess and economic model. In fact, France has been rather vocal about emulating Germany’s vocational training system. However, one must discern that blind replication would not help. 


The Other Side Of The Story 

While it is already established that many European nations covet Germany’s economy, but in the hindsight, it is worth noting that Germany is saddled with a high level of inequality, which sees no signs of subsiding.

And on top of that, about 20% of its population is atypically employed that is either the employees resort to work for low wages or they have temporary or part-time work, sometimes a combination of both. 

Some say that the German education infrastructure is somewhat flawed as although, Germany has a low unemployment rate but even higher job openings. But company are not able to find credible engineers, programmers and other skilled experts. 

Also, while the unemployment rate and economy are doing relatively well, the EU nation still continue to grapple with high poverty rate. So much so that the poverty rate in Germany reached the new record level of 15.7% in 2015, as revealed by a report.


Ongoing Trade War

With precarious Trump, president of the USA, who is vociferously cracking down on China and launched an unprecedented trade war, there are chances that Germany might get caught in the crossfire.

Kevin Heidenreich, the trade expert at the German Chambers of Commerce and Trade, notably said that current trade disputes can turn out to be the “single biggest risk” to Germany’s trade growth. He further forewarned, quoting “Mainly the current escalation in the trade conflict between the US and China is adversely affecting German businesses with large investments in both countries”. 



It is safe to say that Germany has a booming economy and a remarkably low unemployment rate. However, when all is said and done, these figures alone do not resonate the stark reality of the quality of life. Instead, statistics disseminating facts like poverty rate, pay-scale etc. account for a nation’s prosperity. Moreover, it is yet to be seen whether Germany will come out unscathed or will be forced to bear the brunt of the ongoing trade-war spearheaded by the USA.

What do you think?

Written by SocialWhir


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