The OECD report published on 5 April highlights Germany’s robust recovery and high levels of competitiveness since the global economic crisis. It also points out the wide range of challenges facing the country as it seeks to strengthen productivity, boost well-being in a rapidly ageing society and ensure the integration of newly-arrived migrants.
Main findings and key recommendations include 1. integration of refugees and migrants to limit fiscal costs and improve their productivity, 2. strengthening investment and productivity, 3. addressing challenges posed by demographic change.
Germany has implemented far-reaching labour market reforms in the past, but it can do more to eliminate the barriers for women to develop their professional careers, which would boost well-being and incomes substantially. This should include greater investment in childcare, early childhood education and full-day schooling, and lowering the high tax burden on household’s second earners that discourages many women from working full-time. The introduction of a separate tax-free allowance for second earners would improve incentives to work.
Indexing the statutory retirement age would improve the sustainability of the pension system, the Survey says. As the retirement age needs to go up, coverage of disability risks could be improved. There is also scope for further reforms to remove barriers to employment - and well-being - of older workers. Barriers for older workers to combine pension receipt with employment can be removed and the prevention of health risks at higher age could become more effective.
Read the report (in English).
1st February 2021