Implications for Germany-based companies

In a closed economy, the low customer service levels offered by many German companies may have been sufficient to satisfy the apparently low customer service levels expected by German consumers. In the global economy, however, German companies are competing with foreign companies in Germany and abroad. Foreign companies from service-minded societies like the US or Japan have a clear advantage to better satisfy customer needs and show German consumers what they are missing. 

The German economy has been lagging the economies of other developed nations for a while. Although there are several drivers of this situation, one needs to consider the – in a global comparison – poor service levels that are impacting the German economy. These poor service levels may be one of the reasons for the relatively low share of service jobs in comparison with the US (see charts below).

US employment by economic sector

German employment by economic sector

In the US, 85% of employees work in the service sector, in Germany only about 65%. In the US, the service sector has been the source of most new jobs as industries like health care, consulting, and food service have grown rapidly. In Germany, on the other hand, the slightly growing service sector has not been able to make up for the declining manufacturing jobs.  

According to a Deutsche Bank research, Germany’s GNP per capita has been declining and the decline is expected to continue since Germany missed to develop and follow a consequent growth strategy. Could there be a correlation between only slowly growing service sector and declining GNP per capita?

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