Dwindling Labor Force Threatens German Growth

Germany has come out of the global economic crisis stronger than any other country in Europe, with record low unemployment and fiscal surpluses. But the country’s aging population threatens long-term growth as the total size of Germany’s labor force falls. According to Societe Generale analyst Anatoli Annenkov, growth could fall below 1 percent by 2020 if measures aren’t taken to mobilize more people into the work force.

German unemployment  rate

German unemployment has fallen in the last three years, just as unemployment has been going up across the rest of the euro zone. Part of this is due to labor unions accepting lower wages to reduce layoffs and the institution of ‘mini-jobs’ that are extremely...