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Germany’s business boom vs. France’s baby boom

Christopher Werth Apr 19, 2012

Kai Ryssdal: There’s yet another round of ‘What the heck do we do about the European economy?’ talks scheduled for this weekend. Everybody will be in Washington for the Spring meetings of the International Monetary Fund and the World Bank.

Back home, though, on the continent, the discussion generally breaks down like this: Germany thinks other European countries ought to be more like Germany — cut their budgets and improve efficiency. French President Nicolas Sarkozy has promised to do at least some of that if he’s re-elected later this spring.

But as Christopher Werth reports, Germany might have a couple of things to learn from France.

Christopher Werth: Germany’s healthy economy sounds like this: The hum of a factory steadily churning out high-end, manufactured goods. The goods are shiny new BMWs rolling off an assembly line in Munich.

Germany is ticking along just fine, even as the rest of Europe struggles, says Christian Schultz an economist at Germany’s Berenberg Bank.

Christian Schultz: Unemployment is at historical lows. Employment is at historical highs.

For Schultz, Germany’s prosperity is no mystery. A decade ago, he says, the country enacted tough labor reforms that make it easier to hire and fire new workers — something France has yet to do.

But while Germany is the economic engine of the eurozone, Schultz warns that the country is entering what he calls its “Last Golden Decade.”

Schultz: Germany has a big demographic problem. After 2020, overall German economic growth will fade away because of the country’s shrinking population.

In other words, German factories make more Beemers — but French families make more babies.

In central Paris, I met Boris Najman, Stephanie Mahieu and their two sons, Stelio and Kostia, in their modest, middle-class apartment. France is enjoying something of a baby boom, an advantage as employers replace aging workers in the years ahead.

Why are the French so “productive”? Stephanie Mahieu:

Stephanie Mahieu: Having a child in France is relatively cheap compared to other countries. This is it. This is France.

That is, the French government spends more than countries like Germany on generous childcare policies that help parents raise their kids. At age 3, Stelio just learned his ABCs at a state-subsidized pre-school that only costs around $180 a month.

Three-month-old Kostia goes to daycare for free.

Mahieu: And in addition, he’s provided with food, milk. So everything is provided.

Provided free. Mom and Dad don’t pay a dime.

Monika Queisser is an expert on such family-friendly policies at the Organization for Economic Cooperation and Development in Paris. She says when you add in other perks, like flexible working hours for parents, it all appears to do the trick.

Monika Queisser: The availability of childcare, according to research, seems to be one of the major factors in encouraging couples, families to have more children and not fear the dichotomy between work and family.

Which is why Christian Schultz at Berenberg Bank says even though, economically, France would benefit by modeling itself after Germany.

Germany has to come up with the same type of reforms as France has in the past to change their demographic outlook.

But nearly everyone admits there’s no quick fix. Even if Germany’s population were to start growing today, it takes a long time before babies are ready for the workforce.

In Paris, I’m Christopher Werth for Marketplace.

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