The German economy has proven resilient in the face of global financial crisis. Indeed, it has outperformed several, high-income European economies including France and the UK. Currently, unemployment has reached post-unification lows despite the increasing job losses in Europe (OECD, 2014). This unprecedented success can be attributed to timely policy and labor market reforms. However, there is a need for concerted efforts for a sustainable development and business environment, considering the changes in the social, political, and environmental domains. Business professionals stare at an opportunity to enhance their prospects by investing in Germany. Although Germany presents an attractive opportunity for business operations, it is not exempted from challenges. This analysis encapsulates Germany’s political, economic, legal, and cultural environment, outlining the inherent challenges and opportunities of conducting business in the country. The study will then provide guidelines and recommendations essential for a professional worker who has been assigned responsibility in the country.
Stability of Government
Germany is a parliamentary democracy characterized by a pronounced federal structure. Reports indicate that the country’s political institutions are fluid. For decades, the government has enjoyed unprecedented stability, particularly after the unification that brought significant changes to governance. However, in the past four years, Germany political system has witnessed a period of instability. The governing grand coalition of Chancellor Angel Merkel’s Christian Democratic Union (CDU), Bavarian’s Christian Social Union (CSU), and the Social Democratic Party (SDP) underwent a strain in 2018.
As of December 2019, there were increased tensions in the government. The tensions involved CDU and SPD party leaders regarding the terms of the governing alliance. These tensions destabilized the coalition, impacting governance. Instability in Germany’s government comes amid increased political polarization coupled by the rise in popularity of the Green party and far-right populist party, Alternative for Germany (AfD).
Moreover, the 2021 general elections saw Angela Merkel step down as the country’s Chancellor. Political analysts argued that the election set precedence for political and economic crisis which had been synonymous with the UK and could shift to Germany. The installation of the new government means that the country’s political stability still remains fragile. Indeed, Germany’s government has been stable for an extended period which has created an enabling environment for business activities and economic growth. Despite the enormous step made by the government towards economic sustainability through stable governance, it would be fair to argue that the country is still under the hangovers of transition and may not be considered stable.
Business professionals must be aware of the current state of governance in Germany. As the country undergoes transition, there is increased political uncertainty which may extend impact business operations. On the positive note, the economic policies laid by the previous government provide a platform for business operations regardless of the state of the current government. Overall, the German government prioritize economic sustainability and will, therefore, create an enabling environment for business operations. Although the government has experienced various challenges, it is considered stable and favorable for economic growth.
Future Political Risks
Reduced Geopolitical Sway in the European Union (EU)
Germany, among France and the UK is considered as a soft power according to recent rankings. Soft power reflects on a country’s ability to attract and persuade based on its culture, policies, and political ideals. It is essential to note that most of Germany’s soft power accrue from its political values, technological prowess, and commitment to global development goals. However, reports indicate that the country’s role as a geopolitical player is likely to reduce. After the 2021 elections, Germany became confronted with an increasingly multipolar and a weakened-liberal rule-based world (Mühlberger, 2021). As a result, it political influence will significantly be defined by the EU. Therefore, business professionals need to recognize the shift in political power within the EU and potential impact on business operations.
In any democratic society, elections remain fundamental to continuity in governance. Germany, is no exception from this phenomenon. In 2021, the country conducted general election which significantly transformed its political environment. This election marked the beginning of the end for the traditionally dominant parties such as CDU, CSU, and SPD, giving rise to new centrist parties like the Green party (Sloat, 2020). Such changes are likely to bring challenges to governance as the government undergoes transition. Like in 2021, future elections present potential political risks in Germany in that new governments will be established which will then implement different political and economic policies, causing uncertainty in business operations.
Bribery and Corruption Risk
Germany’s performance on bribery and corruption remains exceptional. In 2015, the country was ranked tenth on Transparency International’s Corruption Perception Index. Besides, bribe rates in the country are significantly lower than most countries which stood at 3% in 2016 (Pawelke & Mendes, 2017). This exceptional performance accrues from the government’s support of anti-corruption initiatives. Germany has a robust regulatory framework allowing authorities to detect and prevent corruption in all its manifestations. Besides, its anti-corruption agenda is founded on international and EU’s conventions and policies.
Typically, incoming coalition governments in Germany agree on anti-corruption policies and measures. For instance, there is a provision within the current government that protects corruption whistleblowers in the private sector. Besides, various government bodies and states publish anti-corruption reports annually to ensure transparency. Also, Germany is in the process of implementing open data principles to address corruption and bribery issues.
Despite Germany’s exceptional rankings on bribery and corruption, it still battles bribery and corruption among politicians. The country has witnessed active and passive bribery of members of parliament over the years. Such briberies remain evident when members of parliament buy or sell votes during elections (Wolf, 2013). Although the bribery of parliamentarians is labeled as a criminal offense, the inherent laws are not strict enough to combat this problem. Business professionals need to recognize the existence of bribery among politicians. It is imperative to acknowledge that politicians influence a significant portion on societal operations including business activities. In this regard, they may seek bribes to allow continuity of business operations. Overall, Germany has an excellent corruption record, presenting an enabling environment for business professionals.
Political Do’s and Don’ts
Germany is a diverse society. In this regard, open-mindedness on political ideologies set precedence for success. It is imperative to acknowledge that the country is endowed by many immigrants with various cultural backgrounds. Being conversant with the diverse languages and cultures enables a business professional to appreciate the operating environment and the inherent political ideologies, increasing the chances for partnerships and financial support. Therefore, business professionals need to be open-minded while operating in Germany. This aspect will not only help appreciate diverse cultures and political ideologies but will also ensure business success.
Corruption and Bribery
As mentioned in the previous section, Germany’s performance on transparency index remains exceptional. However, there are some essence of corruption involving politicians. As a business professional, it is essential to recognize that corruption and bribery is a criminal offense in Germany. The perpetrators face penalties which may be detrimental to business success. Therefore, it is advisable not to engage in corruption and bribery.
Germany’s political landscape is experiencing significant changes evident during the 2021 elections. As new parties arise and dominate the traditional parties, ideologies also change. Aligning oneself to a certain party and its ideologies may be detrimental to business operations. For instance, partners and customers holding opposing views may decline products from particular business entity due to the owner’s political stand. Therefore, business professionals need to remain non-partisan to ensure smooth operations created by Germany’s dynamic business environment.
Guidelines and Recommendations
Germany remains one of the most favorable countries to conduct business activities. Its dynamic environment and political stability set precedence for economic success. As a business professional, it is necessary to uphold various practices to ensure successful operations. The following are guidelines and recommendations for professionals seeking to operate in Germany:
Business professionals should integrate corporate social responsibility in their day-to-day operations. Typically, environmental issues remain priority to the German government, particularly after the 2021 election. The government has pioneered reduction of greenhouse gas emissions and Germany remains a world leader in wind energy. In this regard, corporate social responsibility is a fundamental business etiquette in Germany and business professionals should consider this prospect when operating in the country.
Business professionals should embrace integrity by refraining from bribery and corruption. These activities have been criminalized in Germany and are characterized by heavy penalties. Integrity is fundamental in every economic prospect.
Also, business professionals should embrace diversity. Germany is significantly diverse since it is regarded as a country of immigrants. As a professional, it is essential to recognized various languages and cultures for improved interaction and business success.
This study analyzes Germany’s political environment. It includes the government’s stability, potential political risks, bribery and corruption risks, and the do’s and don’ts within the political spectrum. This analysis shows that Germany is a largely stable country despite recent upheavals in its political system. Besides, it performs exceptionally in combating corruption and bribery. Indeed, business professionals must consider the information presented in this analysis to facilitate decision-making regarding the prospect of operating in Germany.
Mühlberger, M. (2021). Germany in the next decade: Ambition and potential. Deutsche Bank. https://www.dbresearch.com/PROD/RPS_EN-PROD/PROD0000000000517239/Germany_in_the_next_decade%3A_Ambition_and_potential.pdf?undefined&realload=FDaeHlG~swfH4v7jTLpZhdNMakBmP1/nQ6iQLksyUe3nHaCkaCR/3IvC26Qt1jXe
OECD. (2014). Better policies series. Germany keeping the edge: Competitiveness for inclusive growth. https://www.oecd.org/germany/Better-policies-germany.pdf
Pawelke, A., & Mendes, M. (2017). Open data and the fight against corruption in Germany. Transparency International. http://webfoundation.org/docs/2017/04/2017_OpenDataGermany_EN-3.pdf
Sloat, A. (2020). GERMANY’S NEW CENTRISTS? The evolution, political prospects, and foreign policy of Germany’s Green Party. EUROPE. https://www.brookings.edu/wp-content/uploads/2020/10/FP_20201020_germanys_new_centrists_sloat.pdf.pdf
Wolf, S. (2013). Political corruption as a regulatory problem in Germany. German Law Journal, 14(9), 1627-1638. https://kops.uni-konstanz.de/bitstream/handle/123456789/24620/Wolf_246209.pdf;sequence=2