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Germany: Germany Finance Profile 2012

2012/03/12

Germany Finance Profile 2012

Services, financial services
Structural change in Germany

The advance of technological progress and the increase in labour productivity lead to dramatic structural changes in the national economy of any industrialised nation. The services sector, also referred to as the "tertiary sector", has become increasingly important in the last few decades. This structural change is characterised by a considerable rise in employment figures of the services sector. On the other hand, traditional areas such as industrial activities lose some of their economic significance.

For example, if in 1970 about 45% of the 26,6 million economically active persons in the former territory were employed in the services sector, 36 years later that proportion was more 72% up in Germany. At the same time the proportion of persons employed in the industrial sector decreased by circa 21 percentage points, falling from 46.5% to 25.5%.

In recent years, the very heterogeneous services sector has also undergone a lot of structural changes. Whereas, typically, in the past consumption services such as trade, hotels and restaurants were most frequently used, first of all, by individuals and households, today the main focus is on services of the business type.

New service industries have emerged. Information and communication technologies play a key role and become increasingly important for the structure and the functioning of the economy. In the conditions of a widening division of labour, the services performed by the services sector for all economic fields help ensure international competitiveness. This also relates to the many consulting services such as e.g. legal, tax and business consulting services, which are indispensable for a market economy to function properly.

However, there were also other factors which have boosted the demand for public and private services, such as higher life expectancy, more leisure time and changes in leisure activities, early retirement, changed family structures, the necessity of lifelong learning and increased health awareness.

The whole services sector consists of the following economic sections:

* Wholesale and retail trade, hotels and restaurants,
* Transport, post and telecommunications,
* Credit and insurance activities,
* Real estate activities, renting and other business activities,
* Public administration and social insurance activities,
* Education and training,
* Public health, veterinary and social work activities as well as
* Other community, social and personal service activities.

Structural survey in the services sector
Number of businesses selling products online continues to be small

As computers and internet use are getting more widespread, e-commerce offers businesses new ways to purchase and sell goods and services.

11% of all businesses in Germany used that new distribution channel in 2008 and sold products or services also through the internet or other computer-based networks. The proportion of businesses taking part in online sales has thus remained at almost the same level for a number of years.

Especially small businesses are reluctant to sell products through electronic networks. Among businesses with ten or more persons employed, as many as 19% indicated to have sold products through electronic channels in 2008. The electronic distribution channel comprises not only sales through the business website but also sales through automated data exchange, which is widespread in vehicle construction.

Although the number of businesses selling products online has hardly increased in the last few years, a marked rise in the volume of turnover is recorded for the electronic distribution channel. The businesses which sold products or services through electronic networks in 2008 achieved as much as 35% of their overall turnover in that way. In 2004 that share had been 27%.

The reasons for businesses not to participate in electronic trade are manifold. As had been the case in 2004, 50% of the businesses using computers indicated in 2008 that their products or services were not suited for online sales. For 23% of the businesses, technical problems in introducing electronic trade were a major reason not to do so. 33% of the businesses also indicated that their clients did not use the offer of online purchase. However, that share decreased by 5 percentage points since 2004, which suggests a rising acceptance of electronic trade among business partners and final consumers.

Language problems in international sales (17%) and negative experience made with online sales (7%), however, played just a minor role among the reasons of businesses not to engage in electronic trade.

Financial services

Within a highly developed national economy, the banking industry – and thus the banking system – plays a central part. As institutional investors and financial institutions, banks perform functions that are important for the national economy. According to the provisions of the German Banking Law, the banks in Germany are subject to the joint supervision of the German Financial Supervisory Authority and the Deutsche Bundesbank.

With the introduction of the euro - as a common currency of the presently 15 European Union member states (Belgium, Germany, Finland, France, Greece (since 1 January 2001), Ireland, Italy, Luxembourg, Malta (since 1 January 2008), Netherlands, Austria, Portugal, Slovenia (since 1 January 2007), Spain and Cyprus (since 1 January 2008) -, the responsibility for a uniform monetary policy in the euro area has been transferred to the European System of Central Banks (ESCB), taking effect from 1 January 1999. The ESCB, consisting of the European Central Bank (ECB) and the national central banks of the EU member states, has taken over the role of the "guardian of the euro", thus bearing responsibility for the stability of the new currency. Transferring the monetary competences to the ECB made it necessary to adjust the functions of the participating national central banks. They have to contribute to fulfilling the tasks of the ESCB. What has not changed is their function of ensuring the functioning of domestic and cross-border bank payments. This means that the Deutsche Bundesbank is also responsible for notes and coin in circulation.

Information on the scope and type of the activity of (private-sector and public-law) credit institutions may be obtained from their balance sheet showing assets and liabilities at a given reference date. The main asset item of the balance sheet is "lending to non-banks". As for the liabilities, the deposits of non-banks are most important.

Most of the banking statistics are compiled by the Deutsche Bundesbank. The start of the third stage of the European Economic and Monetary Union (EMU) has led to a modified presentation of statistical data by the Deutsche Bundesbank from 1999. This will have an impact on the future comparability of results.

Data on the activity of building and loan associations are based on statistics compiled by the federations of private and public building and loan associations. The deposits for building purposes are a special form of savings deposits, which is due to their earmarking (within a certain period of time, they may be used for housing construction only).

The insurance industry offers a wide range of insurances against most different risks. They include private health, accident and non-life insurances (e.g.fire and liability insurances) and also life assurance. The level of business activity can be derived in particular from the amounts insured and the number of policies sold.

The supervisory office for insurance companies is the German Financial Supervisory Authority, which is also responsible for the relevant statistics.

Receipts of medical practices up 12.7% in 2007 compared with 2003

Compared with 2003, the receipts of medical practices (excluding health care centres) were 12.7% higher in 2007, amounting to a total of EUR 399 000 per practice. Most of the receipts (71%) were derived from services rendered to statutory health insurance patients. The receipts arising from services delivered to privately insured patients and from other medical services rose by EUR 28 000 (about 32%) to EUR 116 000 in the period from 2003 to 2007.

The receipts achieved per medical practice depend, on the one hand, on the type of medical specialisation, varying from EUR 296 000 for general practitioners to EUR 2.1 million for practices of radiologists and nuclear medicine physicians. On the other hand, the receipts also depend on whether a practice is situated in the former territory of the Federal Republic (EUR 425 000) or in the new Länder and Berlin-East (EUR 286 000).

Over the same period, the expenditure spent by each medical practice increased by just about 5.1% to EUR 206 000. This was a net profit of EUR 193 000 (+17.7% on 2003) per medical practice. The net profit per practice owner rose by 12.7% to EUR 142 000 compared with 2003.

Further results can be found in Fachserie 2, Reihe 1.6.1 (only in German) which is available for free download via the Federal Statistical Office's publication service.

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