Brief history
Germany was at the beginning occupied by several different tribes but in 800 A.D., the country was ruled by Holy Roman Emperor Charlemagne. However, because of Feudalism, the Roman Empire started to decline. In the early Middle Ages, merchants of more than 200 German towns formed the Hanseatic League to promote mercantile interests. In 1517 Martin Luther nailed his “theses,” denouncing the traffic in indulgences, to the church door and this gave rise to the Protestant Reformation. Growing contrasts between Catholics and Protestants resulted in the Thirty Years’ War (1618-1648), which ended as a European conflict with large-scale military operations, more connected with balance of power than with religion. The war ended with the Peace of Westphalia, which favored the development of Prussia, gave Alsace to France, and granted independence to the Netherlands and Switzerland. By the time Frederick II the Great ascended the throne in 1740, Prussia was already a successful state. Under his direction, the building of theaters, palaces, and monuments transformed Berlin into a cultural center that attracted the world’s aristocracy. In the early 19th century Prussia and the other German states, as well as most of Europe, became part of Napoleon Bonaparte’s French Empire. The congress of Vienna in 1814 instituted a German Confederation of thirty-five independent states and free towns. In 1871 Otto von Bismarck, shaped these small states into a great empire, which crashed with Germany’s defeat in World War I. In 1919, the Nazi party was born because they didn’t agree with the Treaty of Versailles. Adolf Hitler took the control over the government and it lead to the Second World War II. After its defeat in 1945, Germany was divided into four zones of occupation: American, English, French, and Russian. Later, it was divided in two zones: German Federal Republic, with Bonn as capital, and German Democratic Republic, under Soviet influence. In 1961 the Berlin Wall was built symbolizing the end of free movement between East and West Germany. In the late 1980s reforms in neighboring Poland and the former Soviet Union’s glasnost policy paved the way for the fall of the Berlin Wall (1989), and for the merging of the two parts of the country into the Federal Republic of Germany, with Berlin as its capital. Nowadays Germany has risen to the status of leading economic power and is playing a fundamental role in the development of the European Union.
Political system
The is a federal representative democracy. Its political system is laid out in the 1949 constitution, the Grundgesetz (Basic Law). The constitution emphasizes the protection of individual liberty and also divides powers both between the federal and state levels and between the legislative, executive, and judicial branches. The Federal Republic consists of 16 federal states. The Grundgesetz prescribes that legislature is to be handled by the states. Elections for the parliaments of the Bundesländer occur every four to five years. The Federal Chancellor heads the Federal Cabinet and thus the executive branch of the federal government. He is elected by and responsible to the Germany's parliament. Germany is therefore classified as a parliamentary system. The Chancellor cannot be removed from office during a 4-year term unless the has agreed on a successor. The Chancellor is usually the candidate of the party with the most seats in parliament. By contrast, the duties of the Federal President are largely representative and ceremonial. Power is solely exercised by the Chancellor. The President is elected every 5 years on 23. The Federal Diet is Germany's parliament. It is elected for a 4-year term, consists of at least twice the number of electoral districts in the country. The Federal Council is the representation of the state governments at the federal level. It consists of 69 members who are delegates of the 16 Bundesländer and usually, but not necessarily include the 16 Minister Presidents themselves.
The different political parties are:
- Social Democratic Party (SPD) – Social Democrat,
- Christian Democratic Union (CDU) / Christian Social Union (CSU) – Christian democrat conservative,
- Green Party - green
- Free Democratic Party (FDP) – liberal
- Party of Democratic Socialism (PDS) – socialist
Foreign policies and International relations
Peace and freedom are at the core of German foreign policy. The protection of human rights is a fundamental prerequisite for peace, democracy and development in the world of tomorrow. Development policy is not only a moral duty but also a policy for securing a bright future for all. Cultural relations policy is an integral part of German foreign policy, contributing to conflict prevention and securing peace. Therefore, Germany's foreign policy on the European level is focused on deepening and enlarging the European Union (EU) to become a full-fledged partner in all areas of global policy as well as on the further development of partnership-relations with the regions bordering the EU, in the interest of promoting development and stability.
On the international level, Germany's framework for action in the sphere of foreign policy will continue to be the further development of the Atlantic Alliance (NATO) and transatlantic cooperation as well as the strengthening of international organisations, above all the United Nations and the Organisation for Security and Cooperation in Europe (OSCE) and the development of a more active and important role for Germany in these organizations.
The United States is Germany's closest supporter and partner outside the European Union. Germany is working with the United States on a comprehensive concept for reorganising and strengthening the Euro-Atlantic partnership for the 21st century in order to meet the global political and economic challenges arising after the turn of the millennium. Germany's and Europe's ties with the United States remain extremely close. This transatlantic partnership is based on vital mutual interests and values, and has various historical, human, cultural and political ties.
Unemployment Causes
One of the major problems that Germany is dealing with nowadays remains the steadily high unemployment rate and slow growth in the euro zone. First of all, unemployment is a basic measure of the health of any economy and it’s important to briefly discuss the causes and effects of unemployment. Basically, unemployment represents a tremendous waste of talent and resources. Since the work hours of the unemployed cannot be stored, the time lost can never be recovered. Second of all, unemployment causes psychological as well as physical harm on the jobless and their families. Joblessness remains a prominent political issue in Germany. In contrast to a number of other European countries and especially in contrast to the US, Germany appears to be unable to make almost any progress in improving labor market and the welfare state in order to reduce its stubbornly high unemployment rates. Unemployment has extended upwards over the last three decades. At the beginning of the 1970s, Germany enjoyed a situation of full employment with negligible officially recorded unemployment rates. The current unemployment in Germany, which crossed above the politically charged five million mark in January, rose again in February, to a rate of 12.6 percent with 5.2 million people out of work, the Federal Labor Agency said on Tuesday. Recent figures show that this rate is the highest since the World War II, which rose from 12.1 percent in January. It is very easy to argue that persistently high unemployment in Germany is due to the fact that labor costs are too high, real wages too inflexible and the salary structure too dense. Moreover, a large quantity of construction employees are out of work due to a bitterly cold winter but another reason for these high numbers was a statistical change in the number of senior citizens and the recipients of social welfare payments as unemployed. But this is not the only problem that’s causing these high numbers of joblessness. Germany had a lot of trouble with his economy, mainly because it has been battling the consequences of the 5 economy shocks: globalization, the European Union and its enlargement, the introduction of the euro, the opening up of a central and Eastern Europe, and German re-unification. The first rush in unemployment in Germany corresponds to the time when the first oil price shock in 1973 drove the economies of the industrialized countries into a deep recession. Afterward, Globalization and the free trade have enhanced the competition and left Germany uncompetitive due to its high labor costs. Chancellor Gerhard Schroder calls on German companies to stop moving jobs and factories outside of the country in search of cheaper labor and lower taxes and to invest in Germany to provide badly needed employment here. The public are angered by the fact that big German companies are beginning to make record profits again, after three bad years, and have achieved that by cutting costs, particularly their wage bills, and by reducing investment, especially in Germany. Last year, the 24 top industrial companies reduced their investment in Germany by 20%, and worldwide by 10%, according to Handelsblatt, a business daily. At the same time they increased their dividends and payouts to shareholders by 40%. So there is an impression that companies are rewarding their owners, but not protecting their workforce as they did in the past. The result for employers is that the cost of hiring has become too high: just to insure that an employee has net pay of $2,000 per month, employers must pay more than twice that amount in gross salary to cover mandatory withholdings for state pensions, taxes, health care and social security. Some economists estimate that four out of five of Germany's 4.8 million unemployed are without jobs because of these costs. Furthermore, one more shock to Germany’s economy was due to the unification. In 1990 the German unification took place and the economy, in particular the West-German economy was flourishing as Gross Domestic Product rose due to excessive consumption. This resulted in a decrease in unemployment especially in West Germany but in 1992, Germany was hit by a sever recession resulting in large-scale reemployment reductions. Still the gap between East and West Germany is one of the most prominent factors of unemployment. In the East German states, former territory of German Democratic Republic, the transition from a socialist command economy to a social market economy has cost large numbers of jobs. Between 1989 and 1993, the number declined by around 3.6 million to approximately 6.2 million. This meant that immediately following the treaty, there was a sharp increase in unemployment. This came about in part as a result of the increasing integration of the economies in East and West Germany and the enormous transfers of funds paid by West Germans in the form of taxes to the East German states. The jobless rate is twice as high as in the former West Germany. West German arrogance had no respect for people with East German resumes. The mass migration, feared from the beginning, is happening now, daily. Whole areas of the country, its cities and its villages, are being emptied. It’s obvious because 80% of the population now lives in West Germany.
Consequences of unemployment
One of the consequences on unemployment is fall of national output. Labour is a factor of production and when the labour supply falls because of higher levels of unemployment, it will result in a fall of national output (GDP). One way on knowing if a country is doing good or not is to look at their GDP. Germany still ranks in the top countries regarding their GDP, but in the last years, it has fallen.
Another consequence is that it creates a lack of domestic demand. Those who do not work will have to face lower living standards, because their income will fall. The unemployed will have less purchasing power, and less income available. People know that they don’t have a job and it’s going to be hard to find another one, because there are so many people who are unemployed in Germany. Germany’s unemployment rate is at a high of 12, 6 %, resulting in a reduced purchasing power for the citizens. Citizens therefore persistently reduce the consumption of goods and services in order to maintain a greater financial position. In other words, the country stops producing and they start importing from other countries.
In addition, unemployed people, as mentioned above, are not able to spend as much money on goods and services. Hence, local businesses may suffer because people will stop buying products from them and their businesses will go bankrupt. Many areas where large job losses have occurred experience this effect.
A further consequence is loss of tax revenue. A fall in income results in a fall both in direct and indirect taxes because taxes come from wages and indirect taxes come from the products that people would have bought with their wages. An option the government has is to raise the level of taxes on existing wage earners or reduce government spending. Another option would be the government to borrow money but it’s not really a good choice. Every year, unemployment cost Germany more than 70 billions euros, 55 % of the costs were paid directly to the jobless and 45% were losses of the governments at the federal, state and community levels in tax revenues and social security contributions, which unemployed workers were not able to pay.
Finally, unemployment would have a big impact on the society there would be inequalities in wealth and income. Most of the time, unemployment has been always related to negative social effects such as high crime rate. The lack of money to spend on private healthcare, healthy goods and living, means that those who are unemployed often lead less healthy life’s and have less option if something goes wrong. Also, children from unemployed house often had poorer education and fewer skills than average upon entering a work. This mean unemployment could have long-term consequences on children.
Solution to Unemployment
Germany appears to be unable to make almost any progress in improving labor market institutions or welfare state in order to reduce its stubbornly high unemployment rates. German labor market institutions are greatly criticized theses days for being outdated and far too strict. There are many solutions that can be applied when there is a great unemployment rate.
After getting laid off, the worker must therefore not become a burden on benefits paid to bring incomes up to a minimum level established by the law, yet initially should create an individual unemployment insurance account. This account consists of a contract or policy in which an individual receives financial protection. In support of the fact, the German system of insurance and transfer payments to the unemployment urgently needs to be reformed.
Furthermore, to setting up individual unemployment insurance accounts, the maximum duration of a receipt of unemployment benefits should be considerably reduced, for instance to one year, so that the rights to unemployment benefits ceases with the transition into long-term unemployment. The employee’s motivation should be set in such a way that unemployment and dismissals are differentiated as far as possible without losing sight of the insurance aspect. A general waiting period of about two months after dismissal of workers by firms before unemployment benefits can be received would help in this respect. However, for those who quit voluntarily but do not immediately find a job, there should also be a similar waiting period. In order to boost encouragement for citizens too look for new jobs, unemployment benefits should slowly decrease to the level of social assistance: which can only be reached after one year spent in unemployment.
The unemployment benefits are paid for an unlimited time thus promoting long-term unemployment. To sum up, unemployment assistance should be abolished altogether to urge workers to increase their job search efforts. Anyone who has still not found a job when unemployment benefits expire after one year should not be an insurance case anymore but rather a social suffering case. It is also necessary to distinguish between two groups, those who are in principle able to work and those who are not, for example, those who are handicapped or have to care for household members such as small children or elderly people should nonetheless have social assistance.
Moreover, Germans should stop moving jobs and factories outside of the country in search of cheaper labour and lower taxes, as they do. However, they should be focusing on better ideas, such as investing in Germany rather then outside the country to provide badly needed employment. For this purpose, they could try to reduce taxes in order to make the market attractive to companies thus creating an effective increase in Germany employment.
Another key policy is, the education system, which is a big part of employment nowadays. It is essential to apply life long-learning for it, because it has become more important and can surely be improved. Many have difficulties finding a job because they are not participating in life long-learning and are unemployed because they lack education. The development of the economy is characterized by restructuring, which leads to the elimination of unskilled jobs. For the employment of a person with a university or higher technical college degree has increased in spite of the tensions in the labor market, whereas the number of employees with a low level of education or professional training has harshly decreased. It’s gotten worse and we are at a high today in the year 2006 with an unemployment rate of 12.6 % since the years before World War II.
If these current steps are properly integrated, it will have an overall positive impact over unemployment. Nevertheless only an encompassing and bold set of institutional reforms including not only the labor market, but also the goods and the capital market can enable Germany to overcome their constant unemployment problem. This is particularly relevant for German labor market, which has been characterized for decades by high-productivity and high–wage strategy. Nevertheless, the experiment of lowering taxes to remove unemployment assistance should be risked with more confidence than it has been. At the moment, almost anything appears better than the policy of giving in.
Work Cited
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Dougherty, Carter. German Unemployment Reaches 12.6 %. New York: N.Y.New York Times (Late Edition (East Coast)). Mar 2, 2005. p. C.8
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Tobias, Linzert. Sources of German Unemployment: Evidence from a Structural VAR Model. May 1, 2004. Vol. 224, Iss. 3; p. 317
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The Economist. Survey: Squaring the circle. London: Feb 11, 2006. Vol. 378, Iss. 8464; p. 10
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Richard, Bernstein. Schroder Calls On Companies To Create Jobs In Germany. New York: New York Times (Late Edition (East Coast)). Mar 28, 2005. p. A.7
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Locust, pocus. Economist.com / Global Agenda. London: May 5, 2005. p. 1
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Alan, Cowell.,Oh, To Be Young, Charismatic and Centrist in Germany , New York: New York Times (Late Edition (East Coast)). New York Feb 22, 1998. p. 4.3
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Lexinkon-Verlag, Berteismann, Facts about Germany, Lexikon-Institut Betelsman, 1975, p. 371
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Walter, Laqueur, Germany Today, Weidenfed and Nicolson limited.,1985, p. 227
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Peter, Merkl. Germany yesterday and tomorrow. ,Oxford university press-newyork,1965,p. 363
