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May 24, 2017
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The traditional German export sectors pay their employees above-average wages and salaries. The top right-hand quadrant of the chart shows those sectors that generated a foreign trade surplus in 2016 and also paid their employees gross wages and salaries above the average for the manufacturing sector as a whole. In the automotive industry alone, the foreign trade surplus in 2016 was EUR 122 billion (39% of the total surplus). Wages and salaries in this sector were 27% higher than the industry mean. Mechanical engineering took second place in terms of foreign trade surplus (2016: EUR 94 billion). [more]
PROD0000000000448374 1   |    May 24, 2017Chart in Focus May 24, 2017 Above-average pay in export sectors Author www.dbresearch.com Deutsche Bank Research Management Stefan Schneider Eric Heymann +49(69)910-31730 eric.heymann@db.com The traditional German export sectors pay their employees above-average wages and salaries. The top right-hand quadrant of the chart shows those sectors that generated a foreign trade surplus in 2016 and also paid their employees gross wages and salaries above the average for the manufacturing sector as a whole. In the automotive industry alone, the foreign trade surplus in 2016 was EUR 122 billion (39% of the total surplus). Wages and salaries in this sector were 27% higher than the industry mean. Mechanical engineering took second place in terms of foreign trade surplus (2016: EUR 94 billion). Another important export industry in Germany, electrical engineering, is missing from the top right-hand quadrant of the chart. The electrical engineering sectors (computer, electronic and optical products as well as electronic equipment) collectively exported goods worth EUR 150 billion in 2016, placing electrical engineering third in the export statistics (i.e. before deduction of imports), after the automotive industry and mechanical engineering. However, both sectors are in the bottom right quadrant. This is because they pay their employees above- average wages and salaries in 2016. However, Germany imported more electrical engineering products than it exported so both sectors have (slight) foreign trade deficits. The import side is dominated by consumer goods, while on the export side the focus is on capital goods. Overall, the data indicates that the often criticised German foreign trade surplus is primarily due to the quality of the exported goods and does not come at the price of low wages and salaries. Germany has specialised in technologically sophisticated industrial products and in fulfilling individual client requirements, while a large proportion of more "basic" products are imported. This economic structure has developed over decades and is also based on the buying decisions of millions of customers abroad. That is why the criticism lodged against the German foreign trade surplus falls short of the mark when it focuses largely on exports. What should politicians do to weaken this export strength – and why? Deutsche Bank Research Above-average pay in export sectors 2   |    May 24, 2017Chart in Focus © Copyright 2017. Deutsche Bank AG, Deutsche Bank Research, 60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite “Deutsche Bank Research”. The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, licensed to carry on banking business and to provide financial services under the supervision of the European Central Bank (ECB) and the German Federal Financial Supervisory Authority (BaFin). In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG, London Branch, a member of the London Stock Exchange, authorized by UK’s Prudential Regulation Authority (PRA) and subject to limited regulation by the UK’s Financial Conduct Authority (FCA) (under number 150018) and by the PRA. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Inc. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. In the next few years, the German foreign trade surplus is likely to shrink anyway. Indicators of this include the higher investments made by German industrial companies abroad to serve local demand. Demographic developments (ageing population, falling labour force potential) also mean Germany is likely to produce less for foreign countries and consume more itself. However, this will probably be an evolutionary process. If German industrial companies continue to succeed in launching innovative products and increasing the efficiency of production processes (buzzwords: Industry 4.0, digitalisation of the value-added chain, Internet of Things), Germany's industrial export basis is likely to remain strong in years to come. And the companies concerned will be in a position to continue paying their employees above-average wages and salaries.