GERMANYS ECONOMY

Germany's economic structure is typical of highly industrialized economies that often

have a very strong services sector. In 1999 about 68.4 percent of the GDP was
contributed by services, 30.4 percent by industry, and 1.2 percent by agriculture,
forestry, fishing, and hunting. Approximately 63.6 percent of the country's work-force
was employed in services, 33.7 percent in industry, and 2.7 percent in agriculture. The
largest industries in terms of employment in 1998 were manufacturing and mining with
8.65 million employees, miscellaneous public
and private services with 7.44 million, trade and tourism with 6.28 million, and public
administration with 3.2 million. Other major employers were construction, business
services and real estate, and transport and communications. Manufacturing has
traditionally been the powerhouse of the economy, but its importance has declined
significantly over the last third of the 20th century as a result of structural change.
Manufacturing's share of the gross value added to the economic sector fell from 51.7
percent in 1970 to 32.8 percent in 1997. In the same period, the service sector
increased its share markedly. Private services accounted for 37.3 percent of the gross
value added in 1997, while commerce and transport accounted for 14.6 percent. Rapidly
expanding branches, like information technology, communications, and
the aerospace industry, have failed to compensate for the decline of traditional
branches, such as textiles and steel, and the services sector has been unable to
achieve high growth rates given that basic needs of the population are generally
satisfied.

INNOVATION MADE IN GERMANY

Germany invests signifi cantly in fast-developing technologies. With a 2013 R&D
investment level of almost EUR 80 billion, Germany invested the combined
innovation expenditures of the UK (EUR 33 billion) and France (EUR 47 billion) put
together. Technology transfer between universities, non-university research
organizations, and companies takes place in highly specialized technology clusters
located across the country. Individual federal state research budgets often
correspond with those of other European countries. Bavarias R&D spending, for
example, is comparable with the combined investments of Spain and Portugal, while
North Rhine-Westphalia invests almost as much as the Netherlands.

WORLD CLASS KNOW-HOW

While Germany is home to the largest population of researchers in Europe (21
percent of all EU scientists live and work in Germany), German scientists work on
projects all over the world. Research results obtained by the Max Planck Society, for
example, are achieved through fruitful partnerships with some 5,400 partners in
research institutions in more than 120 countries. Cooperation projects between
companies and academic research institutes provide an effi cient way to close
knowledge gaps. Scientists can be easily integrated into the company team of
developers and researchers and, increasingly, institutes provide for the necessary
laboratory facilities.

HIGHLY SKILLED WORKFORCE

Germanys excellent workforce is decisive to the countrys high productivity rates.
It comprises over 42 million people making it the largest pool of ready labor in the
EU. Germanys world-class education system ensures that the highest standards are
always met. More than 80 percent of the German workforce has received formal
vocational training or is in possession of an academic degree.

DUAL EDUCATION SYSTEM

In order to secure the economys demand for highly qualified personnel, Germany
developed a dual system in vocational training - combining the benefits of
classroombased and on-the-job training over a period of two to three years. There
are currently more than 320 occupations recognized by the system. In close
cooperation with the German government, the German Chambers of Industry and
Commerce (IHKs) and the German Confederation of Skilled Crafts (ZDH) ensure that
exacting standards are rigidly adhered to, guaranteeing the quality of training
provided across Germany. One in fi ve German companies take part in the dual
vocational training system, thereby turning apprentices into specialists who fi t each
companys individual needs. Most apprentices receive an employment contract after
training. In production-based industries more than 70 percent are taken on as
employees, underlining the importance of the training system for companies. More
than 1.3 million young people are currently in vocational training in Germany.
Germany's dual education system enjoys an unparalleled international reputation,
being responsible for the lowest youth unemployment rate in Europe.
EUROPES GLOBAL LOGISTICS HUB

With state-of-the-art transportation networks (road, rail, sea, and inland waterways)
as well as a dense network of national and international airports, Germany provides
easy access to domes tic and international markets. As a truly global logistics hub,
more goods pass through Germany than any other country in Europe. Its
approximately one quarter share of the European logistics market (EU-28, Norway
and Switzerland) reflects Germanys role as the major player in the continents
economy.

Mittelstand commonly refers to small and medium-sized enterprises in German-speaking countries,

especially in Germany, Austria and Switzerland. However, the Mittelstand proves difficult to translate
and causes a lot of confusion. The majority of definitions define the Mittelstand as a statistical
category and most commonly suggest that Mittelstand firms are small and medium-sized
enterprises (SMEs; German, kleine und mittlere Unternehmen or KMU) with annual revenues up to
50 million Euro and a maximum of 499 employees

Alongside the major, world-famous companies, there is also a whole range of small and
medium-sized companies in Germany which provide a large number of jobs and are
extremely productive: these small and medium-sized enterprises, or SMEs, make up what
is known as the Mittelstand. This is not so much the case in other countries and in some,
the German word has even been taken up into the local language because there is no exact
equivalent for it. And so its about time we introduced the German Mittelstand and these
very special German companies. Among them, there might be a potential employer for you.

Virtually all German businesses are small to medium-sized companies and therefore fall into the
Mittelstand category. They range from small, innovative software-smiths to globally operating
mechanical engineering firms right through to venerable old artisan businesses, and beyond. In
purely statistical terms, any business with fewer than 500 employees is an SME. But the term
Mittelstand is often used to include much larger companies too if they are run in the same
spirit as a small or medium-sized enterprise. In that case, it means that the owner or owners take
the business decisions largely on their own and assume the risks and liability. In these
companies, the boss usually has close ties with the business and the employees and bears a
particular responsibility for ensuring job security.

All in all, more than 99 percent of German companies are SMEs. In absolute figures, that means
more than 3.6 million companies, providing more than 60 percent of all jobs in Germany. These
companies form a many-faceted, dynamic group operating in all kinds of sectors and offering all
kinds of products and services. If, as a foreign qualified professional in Germany, you are
looking to SMEs to find a potential employer, or have perhaps already made contact with some,
you might encounter two absolutely typical characteristics:
Firstly: a very special mindset in lots of ways. Most SMEs are working to secure the
companys long-term existence and place great value on lasting relationships with customers,
suppliers and other businesses. As an employee too, you are more than just one of the crowd.
Moreover, many SMEs take an active role in their regions by sponsoring education, culture and
sport.

Secondly: Many German SMEs are in line with the traditional German taste for
inventing and tinkering technology driven. The principal sales argument for their products
and services is not usually one of price, but the quality and the large number of innovations that
have found practical implementation. A large number of these companies are the European or
worldwide market leaders in their sector. Within the usually fairly small, internal structures of
these companies, numerous employees working in various disciplines, such as development,
production, sales and service, are involved in the innovation processes and so play their part in
innovation too. To ensure that small and medium-sized businesses are also able to stay
competitive in the future they need to be innovative, especially where digitisation is concerned.
This is why the German government supports the use of modern, user-friendly information and
communications technology (ICT) in SMEs.
Admittedly, these are just two rather general remarks to start with about German SMEs as
employers. We have put together more detailed information about these companies in eight
Facts. On the following pages, youll find some interesting details and surprising figures. This
is where you can discover the many facets of the German Mittelstand for yourself!
Fact 1: German SMEs prize their employees
Fact 2: German SMEs are family-minded
Fact 3: German SMEs are modern and cosmopolitan
Fact 4: German SMEs offer enticing career opportunities

Fact 5: German SMEs invest to create more jobs

Fact 6: The strongholds of German SMEs
Fact 7: German SMEs do business for the long term
Fact 8: German SMEs have a strong sense of social responsibility