Job-Killer McKinsey Warns of Vanishing German Middle Class

The management consulting firm McKinsey has produced a study of the strengths and weaknesses of the German economy: Deutschland 2020. The study was made available to the conservative daily Die Welt, which has reported on it extensively.  McKinsey is projecting annual growth rate in Germany for the next 12 of 1.7%, and this means the German middle class will shrink significantly:

The study, by the consulting group McKinsey, found that in 12 years, 10 million fewer people could belong to the middle class than did at the beginning of the 1990s if economic growth levels do not surpass the forecast 1.7 percent, according to the German newspaper Welt am Sonntag, which had seen the report."The economic growth that we have experienced over the past 15 years has not been enough to reach the citizens," Frank Mattern, head of McKinsey's Germany operations, told the newspaper. "For people in the middle-income range, small growth rates are equivalent to losses."

McKinsey believes a growth rate of at least 3% p.a. is needed for the German middle class to remain at its present level.  Why the anemic economic growth in Germany?  DIe Welt reports:

Die   Antwort ist vielschichtig. Sie hat zu tun mit mangelnder Dynamik und   zunehmendem Globalisierungsdruck, mit erstarrten Strukturen auf dem   Arbeitsmarkt und mangelnder Effizienz im Bildungswesen. Vor allem aber hat   sie mit Produktivitätswachstum zu tun. (The answer is multifaceted. A lack of dynamism as well as the pressures of globalization along with rigid regulation of the employment market and lack of efficiency in education.  Above all it has to do with increased productivity.)

When productivity increases faster than economic growth, more jobs are lost or displaced.  And the new jobs require entirely new skills:

Zwar entstehen durch Produktivitätsfortschritte auch viele neue Jobs   – wie die vergangenen Monate gezeigt haben – das allerdings meist in ganz   anderen Branchen und für ganz andere Berufe als dort, wo zuvor ein Jobabbau   stattfand. „Deutschland ist es bisher anders als anderen Ländern nicht   gelungen, gleichzeitig Produktivität und Beschäftigung zu steigern“, sagt   McKinsey-Experte Boris Maurer. „Genau an diesem Punkt muss das Land in   Zukunft ansetzen, um den Wohlstand dauerhaft zu sichern. Das wiederum wird   nur über mehr Wachstum gehen.“ (Advancements in productivity create new jobs, as we have seen in recent months.  But the new jobs are in entirely new sectors and different professions from the the old jobs. "In contrast to other countries Germany has not been able to increase employment along with productivity," said McKinsey expert Boris Maurer. "This conundrum needs to be addressed if Germany wants to remain an affluent nation. And that can only happen with higher growth.")

How can German enterprises achieve these higher rates of growth?  The short answer: hire McKinsey.

What is ironic is that McKinsey has for years been destroying the German middle class with its management theories.  Whether it's "lean management" or "just-in-time inventory management", Mckinsey has been advising German firms on the latest strategies, which always result in massive reductions in the workforce. Most recently, McKinsey has been selling its services to German executives in the field of BPO (Business Process Outsourcing), which has led to the export of millions of jobs to India, China, etc.

So the best strategy for preserving the German middle class is to kick McKinsey out of the country.