Index
In line with the federal system, structuring and coordinating economic and financial policy is the joint task of central government, the federal states and municipalities. They cooperate in various committees. Furthermore, the Federal Government seeks the advice of independent economists. Every January the Federal Government presents to the Bundestag and the Bundesrat the Annual Economic Report, which among other things describes the government’s economic and financial goals for the year as well as the fundamentals of its planned economic and financial policy. One prerequisite for economic life in Germany being able to function is free competition, which is protected by the law against restrictions on competition. It prohibits anti-competitive practice on the part of both companies and the state. Likewise, company mergers, state subsidies and market barriers are assessed to establish whether they impair competition.
→ bmwi.de
The euro is the currency of the European Monetary Union and after the US dollar the second most important member of the international currency system. Together with the national central banks, the European Central Bank (ECB), headquartered in Frankfurt/Main, is responsible for monetary policy with regard to the euro. The euro is the official currency in 20 of the 27 EU member states. The euro was physically introduced in “Euroland”, including Germany, on January 1, 2002, having served as a currency of deposit since the beginning of 1999.
Germany is one of the leading export nations. In 2022 it exported goods and services valued at some 1,576 billion Euros. The balance of foreign trade fort he year posted a surplus of 81 billion Euros. Germany has above all the strong performance of its industry to thank for its strength in exports. The manufacturing industry sells 50 percent of its goods abroad. In some sectors the volume of foreign trade is even higher still: The automobile industry netted an export share of 76 percent.
→ bmwi.de
The Federal Chancellor is the only member of the Federal Government to be elected. The constitution empowers him to personally choose his ministers, who head the most important political authorities. Moreover it is the Chancellor who determines the number of ministries and their responsibilities. It is he who lays down the guidelines of government policy. These outline the Chancellor’s right to stipulate binding government activities. This authority gives the Federal Chancellor a whole array of instruments of leadership that easily stands up to a comparison with the power of the President in a presidential democracy.
The Parliamentary Council, which in 1949 resolved the Basic Law, took as its role model for the Federal Chancellor the position of the Prime Minister in Great Britain. The Prime Minister possesses exactly the same means of power as that of Chancellor, though the latter’s power is actually far less than that of the British premier. In the British parliamentary system only one party is ever in power, because the first-past-the-post system there favors the strongest party. As a rule, in the Bundestag no one party has a clear majority. For this reason a coalition is normally necessary to be able to elect a Chancellor.
The election of the Chancellor is preceded by extensive negotiations between those parties that plan to govern together. These address specific topics such as how the ministries are to be divided up between the parties, which ministries are to be maintained and which newly created. The strongest party in the alliance is accorded the right to propose the Federal Chancellor. In addition the parties agree on the policies they intend to tackle in the next few years. The results of these coalition negotiations are enshrined in the coalition treaty. Only when these steps have been completed is the Chancellor elected. Negotiations between the government parties prepare the decisions taken by the Federal Government and accompany them afterwards. Should there no longer be political consensus between the parties before general elections for a new Bundestag are due, removing the Chancellor from office becomes an alternative. Should a constructive vote of no confidence result in the current Chancellor indeed being removed from office, a new Chancellor must be elected at the same time. This repeal of parliamentary confidence forces the parties represented in the Bundestag to form a new, functioning government majority before they bring down the Chancellor. There have only been two previous attempts to bring down the Chancellor, only one of which succeeded, namely in 1982 when a vote of no confidence was passed against the Chancellor Helmut Schmidt (SPD), who was replaced by Helmut Kohl (CDU).
However, at any time the Federal Chancellor himself can also propose a vote of no confidence in the Bundestag to test whether he still enjoys the unlimited support of the governing parties. Should the Chancellor lose the vote this indicates that parts of the government majority are drifting away from the Chancellor, leaving the Federal President to decide whether the Bundestag should be dissolved and a general election held. The Federal President can also request the parties represented in the Bundestag to try and form a new government.
In the history of the Federal Republic there has never been a genuine defeat in a vote of no confidence. There have on three occasions been previously arranged defeats: The elected representatives of the government parties or the ministers abstained in order to bring down the government in 1972, 1982, and 2005. This course of action was taken in order to prematurely dissolve the Bundestag, which according to the constitution is otherwise not possible. It can only be taken with the approval of the Federal President and is legally not uncontroversial.
The Federal Government and cabinet is made up of the Federal Chancellor and the Federal Ministers. While the Chancellor holds the power to issue directives, the ministers have departmental powers, meaning that they independently run their respective ministries in the framework of those directives. Moreover, the cabinet abides by the collegial principle, in disputes the Federal Government decides by majority. The affairs of state are managed by the Chancellor.
In 2021, company spending on research and development rose to 75.8 billion Euros. The automotive industry accounts for a large share of these investements.
The German economy is characterized first and foremost by small and medium-sized enterprises as well as the self-employed and the independent professions. Some 99.4 percent of all companies are small and medium-sized enterprises. These are firms with annual sales of below EUR 50 million and a payroll of less than 500. Around 55 percent of all those in employment work in this type of company. Most SMEs are managed by the owners themselves, meaning that the majority shareholder and management of the company are frequently one and the same. Companies are often handed down from one generation to the next. The strengths of SMEs include the swift realization of marketable products, an international focus, a high degree of specialization and the ability to successfully claim niche positions in the market. Precisely these qualities make many German SMEs world market leaders in their field.
Dual vocational training is quite unique internationally. After leaving school, many young people follow one of more than 300 state-recognised apprenticeship training programmes under the dual system. This entry into professional life differs from vocational training based only in colleges such as is customary in many other countries. The practical part of the course takes part on 3 or 4 days of the week in a company; the other 1 or 2 days are spent with specialist theoretical instruction in a vocational school. The courses take 2-3.5 years. In-company training is supported by courses and additional qualification facilities outside the companies. Training is financed by the companies, which pay the trainees/apprentices wages, while the government bears the costs of the vocational schools. Some 500,000 young people conclude new vocational training agreements under the two-track vocational training system each year Thanks to the Two-Track System, in Germany the number of young people without a profession or traineeship is comparatively low. This combination of theory and practical work guarantees that the craftsmen and skilled workers have prime qualifications. Vocational training is also a launchpad for a career that can, via advanced training, lead to participants becoming master craftsmen and women. Today, a qualification track is possible that via advanced training alongside the job can lead even as far as a university Master’s degree.
There is great international interest in the German vocational training system. One focus of the international vocational training cooperation activities by Bundesinstitut für Berufsbildung (BIBB) is to foster cooperation with partner institutes.
→ bibb.de