OECD warns Germany

After a two-year economic boom with growth of more than 3 percent, the OECD forecasts that German economic expansion will reach no more than 0.4 percent in 2012.

Although growth is likely to improve in the next few years, this could be the rate "prevalent" in Germany in the years after 2020, when a "lack of skilled workers" will keep economic expansion here persistently "below 1 percent," the Paris-based organization said in its 2012 report for Germany.

"The working population in Germany is shrinking much faster than the average in OECD countries," OECD general secretary Angel Gurria said while presenting the report in Berlin.

The organization, which comprises 34 industrialized nations, also called on the government to make sure that Germans work longer and are better qualified.

Sharp contrasts

The OECD, however, lauded current German economic policy, which had prevented the country from "falling back into recession" as the eurozone debt crisis worsened.

After shrinking by around 5.0 percent in 2009, Germany marked record growth of 3.7 percent in 2010, and continued to expand at 3.0 percent last year. Unemployment currently stands at a record low of 6.7 percent seasonally adjusted.

"The report praises German labor market policy and said that progress in this area should be an example for other countries," said German Economics Minister Philipp Rösler.

He added, however, that Germany needed to do more to "strengthen the growth potential in this country."

Raft of reforms

For Germans to be able to keep their current living standards, they need to work longer, the OECD said. Additional efforts must be made to "catch up with countries like Sweden, Norway and New Zealand, where 70 percent of people between 55 and 64 years of age still work."

The current rate of employed people in this age category is 57 percent.

In addition, the OECD said that Germany should increase the employment of women by changing the tax system which "encouraged notably mothers to stay at home, looking after their children." A lack of childcare facilities was worsening the situation, the report said.

The organization also called for more immigration to Germany, to offset a "severe shortage of skilled labor" expected to become worse in the years ahead.

Author: Uwe Hessler (Reuters, dpa)
Editor: Michael Lawton