Germany

With its strong past performance providing flexibility during the pandemic, Germany falls into the top ranks internationally (rank 4) with regard to economic policies. Its score on this measure has improved by 0.1 point relative to 2014.

The government reacted to the pandemic with one of the OECD’s largest support packages, featuring generous short-time work schemes and grants for firms. GDP declined by 4.6% in 2020. Prospects for a full recovery are good, given the relatively mild economic impact.

The unemployment rate had declined to about 5% in 2019, suggesting successful integration of the influx of refugees that arrived in 2015. After rising to 6.4% in 2020, the rate fell back to near pre-pandemic levels by late 2021. Labor shortages are now seen as a greater problem than unemployment.

Eight years of balanced budgets and surpluses gave the government considerable flexibility during the crisis. Debt rose to a moderate level of 71.4% of GDP in 2021, and is expected to decline. R&D funding has risen in recent years, with levels above the EU average, but critics point to a lack of disruptive innovation. A new carbon tax has been imposed in the building and transport sectors.

With a social system that performed well in response to COVID-19, Germany receives a high overall ranking (rank 7) in the area of social policies. Its score on this measure has gained 0.3 points relative to 2014.

The country’s healthcare system proved well-prepared for COVID-19, with a high number of hospital beds and medical staffers. Death rates have been low. Parental leave programs are generous. Child care availability is improving. One consequence of strong family support has been an uptick in fertility rates, rare in the EU context.

Education outcomes have improved in recent years, with access to early education on the rise. Lagging digitalization in schools proved problematic during COVID-19 lockdowns, but massive investment improved the situation. The government expanded income support for workers and the self-employed during the crisis. The population receiving long-term unemployment support has continued to fall.

Pension benefits have been broadened in recent years, requiring rising state subsidies and intensifying sustainability concerns. While the issues of immigration and asylum policy remain political flashpoints, medium-term integration efforts appear to be going well. The government has substantially expanded development and pandemic-related aid.

With climate change at last coming to the political forefront, Germany falls into the top ranks internationally (rank 6) in the area of environmental policies. Its score on this measure has improved by 0.4 points relative to 2014.

A court ruling forcing revision to the country’s main climate plan has substantially accelerated ambitions. The modified act commits Germany to being greenhouse-gas neutral by 2045, with a 65% reduction in emissions compared to 1990 levels required by 2030. However, reduction targets for 2022 and 2023 appear unlikely to be met.

The country’s CO2 intensity has declined, but remains high by international standards due to the intensity of industrial production. The energy sector still depends heavily on fossil fuels. Nuclear power is slated to be phased out by 2022. A carbon tax was imposed beginning in 2021.

The new coalition has made climate policy a key focus, saying its goal was a “social-ecological market economy.” The country has pushed for ambitious emissions-reduction targets at the international and European levels. The country performs relatively well with regard to health-related environmental hazards, but agricultural practices and biodiversity are areas of concern.

Reflecting a stable system founded on the rule of law, Germany’s score for democracy quality receives high rankings (rank 7) in international comparison. Its score on this measure has improved by 0.1 point since 2014.

Parties receive public and private funding, with some notable transparency concerns. A law bars parties that oppose the basic democratic order from receiving public funding. The media is largely free of political interference, with considerable diversity of ownership despite growing financial difficulties. Courts have blocked intelligence services from surveilling foreign journalists.

Civil rights and political liberties are broadly respected. Non-discrimination laws are extensive, though discrimination exists in various areas. Quota systems for women have been created for large companies’ executive boards. Xenophobia, antisemitism and Islamophobia are persistent problems.

The legal system, government and administration act predictably. Judicial review is strong, with courts having acted as an effective check on executive actions during the pandemic. Some scandals have emerged over the past decade, but corruption is rare. The law providing access to government information is being expanded to involve proactive duties of disclosure.

With strong federal government performance throughout the pandemic, Germany scores relatively well (rank 9) with respect to executive capacity. Its score on this measure has improved by 0.4 points relative to 2014.

Strategic planning has taken on an increasingly important role, and experts are broadly consulted. The Chancellery has an internal long-term planning unit and a large staff, but ministries have far more resources. While line ministries prepare bills, the most important decision-making body is the coalition committee.

RIAs are mandatory for all laws and regulations. Ex post analyses are widely used in several policy areas, with quality reviewed by an independent body. While the government routinely meets with societal stakeholders, bargaining processes are not highly institutionalized. The previous government achieved a large share of its coalition-agreement goals effectively despite the influence of the pandemic.

Federal government communication was coherent during the COVID-19 crisis, but federal-state action was difficult to harmonize. The federal government compensated municipalities for revenue shortfalls during the crisis. The new government has adjusted ministry responsibilities, upgrading the importance of climate policy.

With a strong set of oversight mechanisms, Germany falls into the top ranks internationally (rank 5) with regard to executive accountability. Its score on this measure has improved by 0.2 points relative to 2014.

Parliamentarians have sufficient resources and strong executive-oversight powers. The Federal Court of Audit is well-funded and powerful. A parliamentary committee serving an ombuds function has limited importance. The decades-old data-protection authority is independent, and has seen its resources substantially expanded in recent years.

Trust in the traditional media is rising, and considerable high-quality information on policy is available. Yet despite widespread news consumption, surveys have reflected a declining interest in political and parliamentary debates, particularly among young people. Media use is shifting toward entertainment rather than information. The recent rise in populist sentiments has been reversed.

Party leaders are increasingly elected on the basis of party members’ votes. Employers’ organizations and unions are powerful and sophisticated. Other interest groups are increasingly influential, particularly at the local level.