Embracing Industry

Ruling Coalition Pivots Toward Business

Merkel at BDI_DPA
Chancellor Merkel is charting towards a new course for the German industry.
  • Why it matters

    Why it matters

    The ruling coalition in Berlin is clearly changing course. Rather than putting social issues at the center of the political agenda, it is now focusing on the needs of industry.

  • Facts

    Facts

    • Chancellor Angela Merkel and Vice Chancellor Sigmar Gabriel addressed business leaders this week in a bid to ally industry fears.
    • The two politicians made business-friendly speeches, which addressed the lack of skilled workers, the energy transition and free trade.
    • The head of the Federation of German Industries said the nation’s competitiveness in the global marketplace is at stake.
  • Audio

    Audio

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It’s now been a year since the German federal elections. As 2013 came to an end, the ruling right-left coalition of Chancellor Angela Merkel’s Christian Democrats and the Social Democrats focused on performing one good deed after another: increasing benefits for people raising children, setting the retirement age at 63 for some workers and introducing a general minimum wage. And in one very loud voice, the German business community has cried out that this focus on additional benefits must stop.

Both Ms. Merkel, and her deputy chancellor, the SPD leader Sigmar Gabriel who is minister for economic affairs and energy, are now trying to assure business leaders that, yes, they have gotten the message. They demonstrated their newly discovered business-friendly stance on Tuesday in Berlin at German Industry Day, an event hosted by the Federation of German Industries, or BDI.

Mr. Gabriel kicked off the competition for the most business-friendly tone. Handelsblatt reported on Tuesday that his ministry is working on a report entitled, “Increasing Competitiveness and Repositioning of Industrial Polices,” which lists six central goals, from improving training for skilled workers to lowering energy costs. In addition, he wants to reduce any concerns among the German people about emerging technologies and major projects by creating an “alliance for industrial acceptance.”

“The competitiveness of our industry, which at present is still at a high level, and the good position our businesses hold globally, are at stake.”

Ulrich Grillo, President of the BDI

Industry leaders were quick to embrace the pro-business rhetoric. Ulrich Grillo, president of the BDI, welcomed Mr. Gabriel’s initiative, saying it marked a new beginning and that it was “very positive.” The major obstacles to increasing private investment in Germany are the uncertain conditions, particularly the implementation of an energy transition toward greener power sources and the expansion of the broadband Internet network.

“The competitiveness of our industry, which at present is still at a high level, and the good position our businesses hold globally, are at stake,” said Mr. Grillo, who challenged the federal government to “strengthen business trust and confidence with more prudent policies.”

Mr. Grillo’s words also had the desired effect on Ms. Merkel.

She responded immediately to the opening shot fired by her economic minister by offering her own pro-business agenda. In her speech, the chancellor focused primarily on four subjects near and dear to the hearts of business leaders: free trade, the lack of skilled workers, German energy transition and digitalization. The German government is a strong advocate of free trade, Ms. Merkel told the 1,300 invited guests at the BDI meeting, and she praised the planned Transatlantic Trade and Investment Partnership (TIPP) between the European Union and the United States because of the growth opportunities it offers.

In the area of information technology and the telecommunications sector, the chancellor called for changes in the E.U. competition law. This is necessary, Ms. Merkel said, “So that global companies can be created in Europe and we don’t get completely fragmented and divided.” Ms. Merkel was referring to the unwieldy patchwork division of E.U. telecommunications. She also called for more discussion on the further development of “big data” and not simply in reference to protecting data from thieves and hackers. With the E.U.’s proposed data protection regulation, she said, European companies will be able to develop new products from the ever-growing amount of accumulated data.

Excerpts from the Ministry of Economic (5)

Ms. Merkel said German industry is under enormous pressure in the area of digital development. The next three to five years are critical for determining whether companies here are capable of integrating information technology in their production, or whether that industrial value creation will be lost to information technology giants in other nations.

She also talked about developments in the problematic German education system, where this year for the first time, there were more first-year students taking academic subjects than trainees in more vocational areas. “We now have to see that dual education is once again given a boost,” she said to applause from attendees. Industry leaders have been complaining for years about the growing lack of skilled workers.

Looking ahead to the German energy transition, the chancellor promised “further decisions in this legislative period.” The German Renewable Energy Act, which was revised this summer, was only a “first step,” she said. Of particular significance to business was that no “competitive disadvantages” for industry be included in the upcoming development of the European Union Emissions Trading System, Ms. Merkel said.

The ruling coaltion clearly is changing course. Rather than putting social issues at the center of the political agenda, it is now focusing on safeguarding and strengthening economic growth.

Efforts to reduce the burden on the German economy are taking shape in the CDU’s economic council, a party organization which represents the interests  of businesses. The council is expected to unveil a list of proposals on Thursday, which are believed to include a proposal to realign energy policy to better reflect market principles, including a phasing out of funding support for renewable energies. The council also is likely to demand the reduction of cold progression and reform of the value added tax system. Additionally, the council is expected to advocate for qualified immigration to meet the need for skilled labor, more compatibility between family and work life and a more flexible retirement age so that people can work longer.

“Now that economic development and global demands are showing that we Germans can’t expect to be served on a silver platter, the federal government must reinforce growth and employment,” said Wolfgang Steiger, general secretary of the economic council. He said this is also true for the infrastructure as more funds are needed for roads and the expansion of the broadband network.

Daniel Delhaes is a Handelsblatt editor in the Berlin office. Klaus Stratmann is a Handelsblatt Berlin correspondent covering energy policy. Contact the authors: delhaes@handelsblatt.com and stratmann@handelsblatt.com.

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