Impulses for Growth and Employment through Profitable Savings in ...

private consumption. If we subtract consumer
goods prices (1.8%) from the relative
change in the wage rate (6.5%) we get
an increase in the real wage rate that is
8.3% higher than the base-line forecast:
An hourly wage can then purchase 8.2%
more consumer goods. An increase in
material efficiency apparently makes the
national economy wealthier.
Table 1
Effects of Dematerialization as Devia-
tions to the Base-Line Forecast in 2015
Variable Scenario I
“Perfect
Markets”
Consumer
goods prices
Producer
costs
Labour
productivity
in stable
prices
Production
value
Gross domestic
product
Private
consumption
State consumption
Capital
investment
Construction
investment
Scenario II
“Wage
Competition”
Scenario
III
“Price
Competition”
relative deviation in per cent
-1.87 -3,25 -7.17
-1.29 -2.55 -7.49
6.52 0.29 4.00
3.30 2.38 6.41
10.48 9.37 13.83
13.36 10.96 15.44
5.98 5.20 11.41
3.71 3.33 5.95
3.25 2.87 4.44
Exports 0.69 0.71 2.20
Imports -2.07 -3.16 -2.50
in respective
prices
State financial
balance
absolute deviations in Euro (billions)
1.28 21.24 -5.72
in persons absolute deviations in persons
Employees
(rounded to
10,000)
-480,000 760,000 -300,000
The government profits from dematerialization
in two ways. For one, it is a direct
beneficiary because costs in public administration
fall by nearly EUR 3 billion
annually through a reduction in material
costs. For another, it profits from general
economic development. However, increasing
fiscal income is counteracted by higher
social costs through lower employment so
that the financial balance of the government
improves only relatively marginally at
EUR 1.3 billion.
Several important results of Scenario I
require further interpretation:
• Despite the acceleration of economic
growth the number of gainfully employed
persons is about 480.000 lower
in 2015 than in the base-line forecast.
• In Scenario I the production costs for
German companies in the manufacturing
sector fall by about 10%. Consumer
goods prices – which encompass
products of the manufacturing
and services sectors – decline by only
1.8%. This discrepancy cannot only be
attributed to the fact that dematerialization
in the simulation model is limited
to the manufacturing sector. Rather, it
is also attributed to market imperfections.
How can employment fall despite the
stated general economic upturn? First of
all we should not forget that – as elaborated
above – one direct effect of dematerialization
on employment is negative.
Namely, that producers of material are
afflicted by a drop in turnover and employment.
Even if other companies do enjoy
cost reductions as well as profit from
an increased demand for goods, which
has positive effects for employment, this is
counteracted by the wage increases induced
by productivity growth as described
above. This effect corresponds to the
wage formulation that is a reality of the
German labour market. Moreover, these
findings are in alignment with findings presented
in the literature outlined above,
namely that process innovation tends to
lead to employment losses.
Results of Scenario II
However, it is also possible to envision a
wage formulation that takes place in the
framework of a societal consensus independently
of the productivity growth induced
by dematerialization. Wage increases
then correspond to those depicted
in the base-line scenario. All other assumptions
remain unchanged.
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