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The German industrial powerhouse

Tuesday, September 25 09:28:59

With one of the lowerst unemployment rates in the world Germany has transformed itself into a powerhouse of industry, exporting it's products which are in demand worldwide. Ingolstadt, with a population of 128,000, provides perhaps the best example of the turnaround that has occurred in the German job market since an overhaul of labour regulations in 2005. Unemployment in Ingolstadt and the surrounding region is just 2.2 percent, the lowest rate in the country. In Eichstatt, a neighboring town, the jobless rate is an almost impossibly low 1.3 percent. The changes that helped create full employment, and then some, in parts of Germany are often held up as an example that other European countries should emulate. And yet, as many low-paid Germans would attest, employment and affluence are not necessarily synonymous - as the country's growing income gap makes clear. Nor are all of those jobs necessarily secure. What is more, a visit to Ingolstadt shows that the low jobless rate is also a result of factors that may not be so easy to duplicate elsewhere. Even Germany is not immune to Europe's economic problems. The Ifo business climate index, considered a reliable gauge of the mood in German industry, fell for a fifth month in September, according to data released Monday by the Ifo Institute in Munich. German managers are concerned that the euro zone crisis is depriving them of sales in other parts of Europe. Like companies all over Germany, though, those in Ingolstadt have prospered from exports beyond Europe - to emerging markets and a general surge in the number of affluent consumers worldwide. Volkswagen's Audi unit, which is based in Ingolstadt and is by far the biggest employer, now sells more of its high-end cars in China than in Germany or the United States. The effects of the labour reforms are impossible to disentangle from the results of sound corporate strategy. "It's hard to say because at the same time the economy recovered," said Thomas Sigi, a member of the management board at Audi who is in charge of personnel. "German industry prepared itself at the right time for emerging markets."