German escape from crisis not ‘God-given but hard-earned’

When German voters go to the polls on Sunday week, their neighbours’ economic problems will not be foremost in their minds. For Eric Schweitzer, the fact that Europe’s largest economy was spared the worst of the euro-zone crisis is not “God-given but hard-earned”.

Dr Schweitzer (48) is president of the Association of Chambers of Commerce and Industry (DIHK), an umbrella organisation for Germany’s 80 chambers of commerce representing three million entrepreneurs.

In his other life Dr Schweitzer and his brother Axel head the waste and recycling company Alba. Founded by their father in 1968, Alba employs 9,000 people from the US to China and has an annual turnover of €2.9 billion.

Like many in Germany’s business community, Schweitzer thinks Chancellor Angela Merkel’s outgoing government has performed well in these uncertain times for the euro zone and supports her policy of making EU solidarity through bailout loans conditional on solid state finances and reforms.

“We’re not living here in the land of milk and honey,” he said. “At the end of the day, countries can only spend as much as they take in, or earn via growth.”

In light of its recent struggles, he says Ireland shouldn’t underestimate the positive reputation it enjoys in Germany ahead of its bailout exit.

'Model student'
"What Ireland has done is viewed as a model student among the EU crisis states," he said. "Everyone in Germany has a huge amount of respect for what Ireland has achieved."

Ireland featured briefly in Germany's election campaign when Green Party leader Jürgen Trittin told The Irish Times it was a mistake not to have leaned on Dublin to increase its corporate tax rate as a condition of its EU-IMF programme.

The argument is likely to flare up again after the election when attention turns to Ireland’s potential request for precautionary funding to ease its return to financial markets.

For his part, DIHK chief Schweitzer says he favours competition or harmonisation in European tax systems.

“I think competition should take place with countries deciding their own taxes because you have different cultures and social systems,” he said.

“The Bundestag would never allow Brussels dictate how high its taxes should be. Control of the budget is the highest competence of a parliament.”

However, he sees a growing determination in Berlin to tackle another tax issue involving Ireland: legal tax avoidance of multinational corporations. This has already attracted close scrutiny of the Organisation for Economic Co-operation and Development alongside its call yesterday in Dublin for a greater effort to tackle Ireland’s youth unemployment problem.

Youth joblessness
For its part, at just 7 per cent, Germany enjoys the lowest youth jobless rate in Europe and Schweitzer says the DIHK's Berlin offices have become a place of pilgrimage for foreign visitors anxious to find out why.

One reason, he says, is Germany’s dual vocational training system. Rather than funnel all school-leavers into universities, at least half pursue a dual programme, combining further education and workplace experience.

The scheme covers every industrial sector from construction and carpentry to sales and tax consulting.

Key to the system’s success is a high level of engagement from companies: they are obliged to develop in-house programmes for their trainees – not buy them off the shelf.

Germany has its own interest in exporting its training system: in particular a growing, urgent need to encourage inward migration to fill a widening shortage of qualified workers.

“In the next 12 years, we will lose 15 per cent of our labour force, or six million people, due to the very low birth rate in the last decades,” said Schweitzer.

With progress on further euro-zone reform on hold until after the election, the DIHK president says many criticisms of Germany are unjustified.

He agrees that German exporters have benefitted from an undervalued single currency.

“But other euro countries that are customers, particularly in southern Europe, are buying less, so that hits us,” he said.

He doesn’t think that greater stimulus measures, in addition to continued reform, would help win back customers.

“The reform path in Europe has to be continued,” he said. “Only then is growth and more employment possible.”