Angela Merkel: main economic policies and challenges after the announcement of her resignation

German Chancellor Angela Merkel announced her departure from politics for 2021, but its impact on the economy probably lasts much longer

German Chancellor Angela Merkel on Monday announced her resignation from leading the Christian Democratic Union (CDU) and set the year 2021 as her exit date from politics just after finishing her fourth term. This is because of the pressure due to the bad results that her party has had in the regional elections. Below we present an account of some of their economic policies and their contribution to the more stable economy of the eurozone.

Leer en español: Angela Merkel: principales políticas económicas y retos tras el anuncio de su renuncia

An important help for working mothers

In 2007 Merkel established the "Elterngeld" or benefit for parents, in an effort to provide support to couples with children. This policy resembles maternity payments, but it is available to benefit both parents in order to alleviate the financial burden of families and increase the low birth rate that the country had at the time. This scheme is financed by taxes and allows both parents 14 months of rest after the birth of their children, in which each receives 67% of their salary. While this policy did not achieve the expected increase in the birth rate, according to The Guardian, "the policy has had a great impact on family life in Germany, particularly in the lives of working mothers."

Leadership during the crisis

After the crisis of 2008 that affected the majority of European economies, the chancellor achieved the flourishing of the German economy thanks to the introduction of economic stimulus packages and cuts in working hours. According to The Guardian newspaper, the success of these measures was to achieve that "the workers worked less, but their profits were surpassed by the government instead of the companies".

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Between 2009 and 2013 with Merkel's decision to entrust Wolfgang Schäuble as head of the Ministry of Finance, the per capita income went from 30,000 euros in 2009 to 34,400 in 2013, according to the portal Empresa & Economía. The same portal states that "At the same time, the unemployment rates moved away from the levels of the previous five years and were infected by the positive evolution of the rest of the macroeconomic indicators. (…) Precisely, the rescues chapter was the most important at the community level in those four years ".

Other domestic successes

On the other hand, in response to the Fukushima disaster, in 2011 Merkel announced the closure of eight of the 17 nuclear reactors in Germany and promised the closure of the remaining 9 by 2022. This policy, under the name of "Energiewende", encouraged the transition to alternative sources of energy, which made Germany the world leader in energy reforms and efforts to confront global warming.

In 2015 Merkel also executed the proposal promoted by the social democratic party to impose a minimum wage of € 8.50 per hour to confront the wage inequality and end the wage freeze following the requests of workers to maintain their competitive advantage. According to the newspaper El País, this policy was complemented in 2017 with the promise of a tax cut for those who earn less than 60,000 euros, along with a reduction in social security contributions for those who earn up to 15,000 euros to the year, policies that would benefit 9 of 10 German workers, because, according to the same source, "Germany is one of the few countries in the eurozone that can lower taxes and increase spending."

Finally, an article in El Confidencial published after Merkel's statements about his resignation states that "The federal government has managed to close the four years of this legislature without generating new debts. A combination of positive evolution of the labor market, weak euro and minimum interest rates have contributed to Merkel achieving one of its main objectives, the zero deficit, something that Berlin had not achieved since 1969. "

However, although in general the reception and results of Merkel's policies have been positive, it is still too early to make a general assessment of her government due to the new challenges she has in her remaining 3 years of mandate. The main one being the integration of refugees.

Merkel's challenges in her final years

Although refugees seeking asylum in the country have health and accommodation services along with a guarantee of education for children and free German courses for adults, the rate of refugees who have gained access to the labor market is minimal. This, according to El Confidencial, is due to bureaucratic obstacles to the validation of degrees, the lack of formal training and the linguistic barrier. However, overcoming these problems is among the Chancellor's priorities now that recent studies on aging in the country have revealed that Germany will lose millions of workers in the coming decades.

Another challenge on which most parties have agreed is the need to double investment in infrastructure for roads, bridges and, especially, broadband and fiber optics.

Finally, the chancellor has proposed to strengthen the environmental policy Energiewende, because despite the decisions made after the Fukushima incident, CO2 emissions in the country have remained the same in recent years and the use of coal has been increasing.

LatinAmerican Post | Sofía Carreño

Translated from "Angela Merkel: principales políticas económicas y retos tras el anuncio de su renuncia"

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