Germans set sights on US

The new German government says it will double public spending on R&D over the next five years in a bid to catch up with the US, which it says has raced ahead in industries like information technology. The injection of funds will follow ‘years of stagnation’, said minister for research Edelgard Bulmahn, who is promising […]

The new German government says it will double public spending on R&D over the next five years in a bid to catch up with the US, which it says has raced ahead in industries like information technology.

The injection of funds will follow ‘years of stagnation’, said minister for research Edelgard Bulmahn, who is promising big changes in the government’s overall approach to research.

‘The most important thing is to create conditions in which the whole innovation process from the idea through to the marketable product can operate,’ she said.

But industry is sceptical. Some fear the approach will be more politically than commercially driven, especially in environmentally sensitive areas like biotechnology.

Bulmahn denied this, stressing the need for closer co-operation between industry and the scientific community, as in the US.

The Government’s new commitment to research and development will help hundreds of fledgling companies in the east of the country.

Helped by local pools of highly skilled labour, these firms are building a reputation for innovation. The number of patents filed in the region is rising dramatically, although lack of financing is thought to be hitting hundreds of firms.

More spending on R&D is one thing, but solving the east’s biggest problem alarmingly high unemployment is another.

And the chances of reducing joblessness across the country in the coming years aren’t good, according to new predictions from Prognos AG, a research company based in Basel, Switzerland.

Prognos says average annual unemployment is unlikely to fall below 10% by the year 2010. By 2020 things would not be much better, with unemployment standing at around 8%. And even that could be an optimistic prediction, the report says.

Germany will remain a leading manufacturer of high-value products, like cars. Productivity across all industries is increasing by around 2.2% a year, while labour costs are rising at an annual rate of 2%.

However, this won’t be enough to halt a decline in jobs, particularly in manufacturing, where the pressure of global competition will continue to bite.

By 2020, the machine building and chemicals industries are expected to shed several hundred thousand jobs.

The car industry will lose about 50,000 jobs. About one in five jobs in industry will have gone by 2020.

Prognos agrees research and development is vital. Innovation remains the motor of growth in Germany’s export industries, the report says.

Stuart Penson