Sustainable Policies


Economic Policies

Though momentum is slowing after years of exceptional economic performance, Germany falls into the top ranks internationally (rank 5) with regard to economic policies. Its score on this measure has improved by 0.3 points relative to 2014.

Growth has declined substantially, as trade wars and global uncertainties have weakened exports. However, the labor market remains buoyant. Wage increases and a rise in unit labor costs have not undermined competitiveness.

The overall unemployment rate reached its lowest level since unification, at 4.8%. The minimum wage policy, in effect since 2015, has not produced any clear detrimental economic effects. Integration of the large wave of refugees has proceeded well, with unemployment rates in this population steadily declining.

The average marginal income tax rate is much higher than the OECD average. High tax rates and the complexity of the tax system have diminished Germany’s appeal as a destination for investment. The debt-to-GDP level has continued to decrease to below 60%, with the government posting successive budget surpluses. A new general tax incentive for R&D has been implemented.

Social Policies

Showing gains across its social system, Germany receives a high overall ranking (rank 7) in the area of social policies. Its score on this measure has gained 0.4 points relative to 2014.

Education outcomes have improved in recent years, with the quality of primary and higher education showing consistent gains. Participation rates in early-childhood education are high. The country’s dual vocational-training approach helps keep youth-unemployment rates down. The employment boom has resulted in record low levels of households on social support, despite the recent influx of refugees.

The mixed public and private healthcare system is of high quality, but cost pressures are growing. Parental-leave programs are generous. Child-care availability is improving. Women’s employment rates are quite high, though many women work only part time. 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. However, a xenophobic party has capitalized on public concerns, becoming the third-largest parliamentary group. The government has expanded development aid particularly to North Africa, seeing to address drivers of emigration.

Environmental Policies

With new attention being paid to the issue of climate change, Germany scores well overall (rank 12) in the area of environmental policies. Its score on this measure has declined by 0.6 points relative to 2014.

After a period of complacency, a new set of measures has revitalized Germany’s climate-change policy. A new climate act introduces CO2 pricing for the traffic and housing sectors, and obliges the country to cut greenhouse gas emissions by 55% compared to 1990 levels by 2030. About 48% of energy production resulted from renewable sources in 2019.

A separate plan will phase out coal-fired power generation by 2038, with compensation provided for coal-mining regions. Nuclear power is slated to be phased out by 2022. CO2 intensity is still high by international comparison, due to industrial production.

The country performs relatively well in the areas of wastewater treatment, water resources and biodiversity, but agricultural practices remain an area of environmental concern. The new domestic climate policies have strengthened the country’s credibility as a negotiation partner in international venues.

Robust Democracy


Quality of Democracy

Reflecting a stable system founded on the rule of law, Germany’s score for democracy quality places it in the top ranks (rank 5) internationally. Its score on this measure has improved by 0.1 point since 2014.

Parties receive public and private funding, with some 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. A law allowing surveillance of foreign journalists has been challenged on constitutional grounds.

Civil rights and political liberties are broadly respected. Non-discrimination laws are extensive, and same-sex marriage has been legalized, and a third gender category provided for official documents.

The legal system, government and administration act predictably. Judicial review is strong. Some scandals have emerged over the past decade, but corruption is rare. While political figures’ income-disclosure requirements have been strengthened, some loopholes remain.

Good Governance


Executive Capacity

Despite tensions within the governing coalition, Germany scores relatively well (rank 11) with respect to executive capacity. Its score on this measure has improved by 0.2 points relative to 2014.

The domestic agenda stems largely from negotiations between the coalition-partner party leaders, with the Chancellery possessing comparatively limited independent powers, and disputes resolved in the coalition committee. Driven by electoral concerns, the governing parties have acted to pursue their own interests through the ministries under their control, undermining coordination.

Several RIA programs are in place, producing generally high-quality reports. Sustainability concerns are regularly reviewed. While the government routinely meets with societal stakeholders, bargaining processes are not highly institutionalized. The grand coalition has achieved a large share of its coalition-agreement goals effectively.

While the coalition parties have sought to raise their own profiles at the expense of other government parties, decisions on climate and welfare-state policies were jointly and coherently defended. Regulations are typically enforced in an effective, unbiased way. Under a new digitalization pact, the federal government will invest about €5 billion in schools’ digital infrastructures.

Executive Accountability

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. Courts have bolstered investigation committees’ rights to access governmental records. The Federal Court of Audit is well-funded and powerful. A parliamentary committee serving an ombuds function has limited importance, but the independence of the decades-old data-protection authority is well protected.

Despite widespread news consumption, surveys have reflected a declining interest in political and parliamentary debates, particularly among young people. Populist sentiments are becoming more widespread. Trust in the traditional media is rising, though this varies across the political spectrum. Digital disinformation is creating a growing problem.

Decisions within the main political parties are made largely by top party elites, though party members have strong influence over candidate selection. Employers’ organizations and unions are powerful and sophisticated. Other interest groups are increasingly influential, particularly at the local level.
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