I don't see how this answers the question in the title. How does the school of mathematics of the University of Goettingen help make German factory workers competitive with Chinese ones? Why aren't these companies moving their production to cheaper markets like companies elsewhere do?
http://fortune.com/2014/10/22/why-germany-is-the-eurozones-b...
This is not something Germans -- such as apparently the author of OP -- like to talk about.
An article in English:
http://www.nachdenkseiten.de/?p=18499
> The share of low-wage workers (less than 2/3 of the median hourly wage) rose from 17.7% in 1995 to 23.1% of all workers in 2010. The number of low-wage workers increased from 5.6 million in 1995 to 7.9 million in 2010.
Another article, from Süddeutscher Zeitung, in German:
http://www.sueddeutsche.de/wirtschaft/bremse-fuer-die-wirtsc...
That's easy, since Germany is also the largest country in Europe (not counting Russia), has the largest number of employees, has a lot of people from East Europe coming for work, ... The alternative would be to move many of these jobs outside of Germany, which sits right next to a lot low-wage countries.
The low-wage sector was also expanded, because politics wanted to reduce long-term unemployment and thought that a low-wage job with some social security is better than not working.
We should also remember that Germany with now 80+ million people has taken in 20 million people from East Germany (with its economy mostly collapsing) and many of them have still a harder time to find jobs, which has a lot of reasons. One of the reasons is exactly that this eastern part of Germany now lacks this large based of mid-sized companies who are competitive.
(2) Germany is the biggest country in EU (EU != Europe), has the largest workforce and, thus, the largest low-wage sector. Yes, that is correct. But it is not "easy", as this Eurostat graph shows:
http://ec.europa.eu/eurostat/statistics-explained/index.php/...
You see Germany in the company with such economic powerhouses as Estonia, Poland, Lithuania, Romania, Latvia - all of them having a bit worse PERCENTAGE of low-wage workers than Germany. This is not someone's perception, or some narrative, these are hard numbers.
(3) You obviously didn't read the articles I've posted. Especially that from Nachdenkseiten as it lists many other issues not widely spoken about in the mainstream media - neither in Germany nor in other countries. It is an analysis from Prof. Dr. Gerhard Bosch (Geschäftsführender Direktor Institut Arbeit und Qualifikation Universität Duisburg-Essen). While we discuss the article published oh hbr.org, which talks about the causes for the success of the German economy, Mr. Bosch mentions the elephant in the room:
> German economic policy continues to be characterised by its excessive focus on exports. As a way of dealing with the euro crisis, the German federal government advises other countries to introduce their own labour market reforms on the model of the Hartz Acts. This policy, however, cannot be applied at will to other countries, since only by abolishing the laws of mathematics would be it possible for all countries to have export surpluses.
Meaning: German model doesn't work for others. And, it only works for Germany because others take a hit while Germany "takes" a surplus.
Yes, German economy/society has it's qualities. But would it be such a "success" without major influence in EU institutions, in ECB, without Euro, with other countries having their currencies (which they can devalue to make their good cheaper and imported - German - goods more expensive), with customs on its goods, with fairer wages in Germany? I highly doubt it.
German companies ARE moving their production to cheaper markets. They have been doing this for decades and they are doing it today. At the same time the market has expanded and changed. Thus new jobs are created, even a few are coming back. If we talk about manufacturing, which was the original topic, you can see multiple trends (examples in parentheses): exports of jobs (ship yards), back-import of jobs (automated manufacturing), disappearing jobs (nuclear industry), creation of new jobs (renewable energy), ...
> economic powerhouses
East Germany is our own 'economic powerhouse'. Twenty million people with a much different job market, compared to West Germany.
> You obviously didn't read the articles I've posted.
None of that is new. If you read German mainstream media, that stuff has been discussed for a long time. FAZ, Handelsblatt, etc. have published a lot of these arguments. It's just that for each economist arguing that way, we can find another one, which argues against it. The media published this discussion. You just have to read it.
> abolishing the laws of mathematics
That's a very simplified argument, with a very limited view what actually happens.
> But would it be such a "success" without major influence in EU institutions, in ECB, without Euro, with other countries having their currencies (which they can devalue to make their good cheaper and imported - German - goods more expensive), with customs on its goods, with fairer wages in Germany? I highly doubt it.
Germany has influence not because the ECB or the Euro. It has influence because it is the largest european country, it sits in the middle of europe. ECB policy has NOT following German demands. The Euro was not a German invention. But that European monetary systems have been influenced by Germany because of its economic power has always been true.
If you look back, Germany has export oriented with large surplus for decades. Without the Euro, with the European Monetary System, with the Euro.
The german economy will simply adapt to the changing conditions: weak currency, hard currency. The industry will react, but it will always be export oriented. Generally the economists prefer a harder currency, which actually will not have a specially negative effect on the export industry. With the super-hard Deutsche Mark, the export industry was doing just fine.
The article does mention wage suppression in the beginning but does not give a good argument why the wage suppression as observed in Germany since the early 2000's is a bad thing -- if wages are inflated and you need to compete with China for manufacturing, then you can either scrap your manufacturing or suppress wages, there’s not that much of an alternative there.
My sibling comment arguing that the largest low-wage sector in the EU is somehow inherently bad is also misguided: if the alternative is much higher unemployment, low-wage jobs are still preferable to no jobs, especially if they come with the usual social security mechanism, as is increasingly the case again.
No, the magic Better pay and still secure job does no exist outside of naive communist Ideas.
Actually the midsize manufacturing companies offer long-term employment, fair wages, jobs in rural areas, jobs which require high-qualifications, ...
These people who are working in these midsize manufacturing companies are in high demand and that they have low wages or participate in low-wage jobs is completely wrong.
We are talking about companies like the manufacturing company bought by Tesla.
https://www.theverge.com/2016/11/8/13561146/tesla-acquisitio...
If you look at a typical German 'Mittelstand company', many look more like high-tec laboratories than typical factories from the inside, lots of robots, high automation, the people working there need to know the technology inside out, troubleshoot and fix problems quickly. That's difficult to get from a manufacturer on the other side of the globe who needs to juggle many different clients from all over the world.
And many German workers still have a certain loyalty to their company, since the company owner isn't some international celebrity CEO installed to squeeze the last bit of money out for 'shareholder value'.
The search for precision and applied scientific discovery. [0] Enlightenment drives every aspect of German manufacturing. Factory workers are in an environment that makes things driven by these processes.
[0] An immediate example that comes to mind is the electric signal activation of the liquid suspension (magneto-rheological fluid) in the Audi R8. cf "The Audi R8: The Suspension" ~ https://www.audiworld.com/articles/the-audi-r8-the-suspensio...
This is an extreme example. It also highlights why Chinese/German manufacturing is different. One is aiming at mass market, low cost. The other high cost but desirable. The low cost German manufactured cars are measurably better than the Chinese.
[0] https://blogs.wsj.com/drivers-seat/2012/08/16/chinese-cars-r...