Productivity: Corona Crisis and Structural Change
National Productivity Dialogue 2022
The National Productivity Dialogue, organised by the Representation of the European Commission in Germany together with the German Council of Economic Experts, took place for the third time on 27 January 2022. Below you can find videos and a short summary of the event.
A large number of participants attended throughout the event. In various formats, the results of the national productivity report were discussed with politicians, scientists and employer as well as employee representatives.
Sven Giegold (State Secretary at the Federal Ministry for Economic Affairs and Climate Protection) emphasised in his keynote address: "We need a high level of economic dynamism, innovations and productivity growth, particularly in view of the major challenges in digitalisation and climate protection. Only through innovation and competition will we be able to manage the dynamics of change. In the social-ecological market economy this change can only succeed if the regulatory framework properly sets this competition and innovation in the areas of the future."
Video in German only
In the first 'discussion with', Mathias Cormann (Secretary-General of the OECD) and Prof. Volker Wieland, Ph.D. exchanged views on the stabilisation policy in the Corona crisis and its impact on productivity.
"In Europe, we chose the path of supporting companies directly, for example through direct payments and very generous short-time work programmes. In the US, the support went directly to the workers and the unemployed," Volker Wieland explained. Mathias Cormann added: "We fear that tying up staff and capital in ailing companies reduces innovative capacity, productivity, new job creation and economic growth."
They furthermore discussed digitalisation in Germany. According to Volker Wieland, the digitalisation engine is sputtering especially in smaller companies: "In Germany, smaller companies invest significantly less in new digital technologies and adapt their processes less than large and medium-sized companies." Mathias Cormann emphasised with regard to Germany: "It is of central importance to promote the digitalisation of smaller and less productive companies. The limited availability of broadband internet outside big cities seems to be an obstacle."
Video in German only
Dr. Christian Lerch (Fraunhofer Institute for Systems and Innovation Research ISI), Michael Vassiliadis (Chairman of the IGBCE), Miriam Wohlfarth (Founder and Managing Director of Ratepay and Banxware GmbH) and Prof. Dr. Veronika Grimm discussed the effects of the Coronavirus pandemic on the German economy and how targeted support for innovation can be provided.
Veronika Grimm emphasised in a short introductory remark that Germany should build on the boost to digitalisation caused by the Coronavirus crisis to strengthen its innovation potential. To this end, public administration and schools should be consistently further digitalised and the digital infrastructure should be expanded. Pandemic-related learning losses need to be quickly made up. In addition, educational opportunities among pupils must be further equalised.
Michael Vassiliadis explained with respect to workplace training: "With regard to structural change and to digitalisation, companies underestimate the strategic part of a proactively trained workforce." Germany is a finishing machine, hence qualification, processes and digitalisation must not only be kept up-to-date, but must be up front, he added.
Christian Lerch said: "Companies that were already highly digitalised before the crisis have benefited from the boost to digitalisation in particular.” The gap between digitalised and non-digitalised companies is widening, he explained. Miriam Wohlfarth added: "Digitalisation is on the agenda everywhere. But that doesn't necessarily mean that anything really happens. Digitalisation is too often not given a top priority."
Video in German only
In the second ‘discussion with’, Steffen Saebisch (State Secretary at the Federal Ministry of Finance) and Prof. Dr. Achim Truger discussed the question: 'Economic and fiscal policy measures to increase productivity growth – How can the Ministry of Finance support an economic policy that increases productivity?’ The policies in the Coronavirus pandemic were also discussed. On company aid, State Secretary Steffen Saebisch said: "In particular, the operational implementation across the different levels of government was a major challenge." In the next six months, however, Steffen Saebisch said, one must look more closely at which sectors need more attention - and where to avoid over-funding. However, the German Council of Economic Experts' assessment that no wave of insolvencies is to be expected shows that the funds were well spent. Achim Truger added: "Even if every single company that goes bankrupt is a problem, the overall economic development of corporate insolvencies currently looks relatively good."
Video in German only
Prof. Dr. Henning Kagermann (Chairman of the acatech Board of Trustees), Dr. Bernhard Rohleder (Chief Executive of Bitkom e. V.) and Prof. Dr. Monika Schnitzer discussed the question of whether digital platforms are a driver or an obstacle to productivity growth.
In her introductory remarks, Monika Schnitzer explained the results of the productivity report and said: "With suitable measures, the potentials of the data economy could be realised. These measures include improving data access and exchange, strengthening competition in the data economy and developing a coherent digital strategy." However, German companies use cloud computing services to a much lesser extent than companies in other European countries. The use of digital platforms is particularly low for small businesses, she explained.
Henning Kagermann was concerned that access to the customer can be lost through cooperation with platforms: "Digital platforms can become a barrier to competition if platform providers occupy the contact point to the customer or become active themselves in the core business of the platform users."
Bernhard Rohleder even considers digitalisation as a long-run challenge: "Digitalisation is a process that will not be completed in our lifetime. So we always have to keep moving."
Video in German only