Germany: Demographic Challenges Require Reforms Amid Political Fragmentation
Politics tamfitronics Note: Dashed lines show EU-27 averages. Highlighted countries include those sovereigns rated AA and above by Scope Ratings alongside Italy, Spain and Japan. Working-age population includes people aged 20-64. Hours worked are shown per employee, i.e. including full- and part-time workers. Source: Eurostat, ILO, Scope Ratings.Credit Outlook Stable but Demographic Pressure Set to IntensifyGermany’s robust public finances and diversified economy continue to support its AAA sovereign rating, which Scope Ratings reaffirmed on 27 September.However, the productivity gains that have long offset the relatively lower hours worked in Germany may no longer be sustainable in the face of a shrinking workforce. Demographic pressures could strain productivity particularly in manufacturing, threatening Germany’s global competitiveness and pushing companies to accelerate automation or outsourcing.Addressing this challenge requires labour-market reforms, increased immigration with the aim to attract and...
