Europe

No fun without money in German town of Neuss

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Media captionHugh Schofield reports from Chalons-en-Champagne in France, and Stephen Evans reports from its German twin-town, Neuss

France will reveal on Friday whether its economy grew in the final three months of 2013. France has an unemployment rate of almost 11% and a heavily centralised economy. But in Germany much of the decision making is at local level, as Stephen Evans explains from the western town of Neuss.

The mayor of Neuss, Herbert Napp, has a motto: "No money, no fun." It illustrates his view of German capitalism: profits are to be celebrated as the source of city funds to be spent on other things.

A Christian Democrat, he has been mayor for 16 years and expounds his views on money and business in his room in the Rathaus (town hall) overlooking the market square.

"First the money, then everything else comes later," he says. "When we get our taxes from the companies, we have money to spend on social things or cultural things and so on and that gives the city a living."

He is too polite (and wise) to contrast this with attitudes towards profit-making in France, but he does see a difference in how the two countries organise their political structures,

"It's very good for us in Germany because the cities are allowed to make a lot of decisions by themselves," he says. "We are very different from France because there it is controlled from the centre and most decisions are made in Paris and not in the small cities."

German cities compete with each other to attract business, he argues, rather than having policies being directed from Berlin or the regional state capitals. It means his city can tailor its pitch to potential in-comers to suit their needs, and this has led to an influx of companies, particularly from China.

The result is a rate of unemployment which, at just under 7% of the workforce, is high in historical terms but low for a region badly hit by the closure of old heavy industry.

Unemployment in Germany in general is much lower than it is in France (5.2% of the workforce compared with 10.8%). And this lower German jobless rate is despite the fact that the German working week is on average about two hours shorter than in France.

Image caption Gerhard Schroeder's government made drastic cuts to benefits for the jobless in 2003

Germany's lower rate of unemployment is often attributed to labour market "reforms" made by the Social Democratic/Green government a decade ago - a centre-left government making the labour market tougher.

The changes introduced by Chancellor Gerhard Schroeder in 2003 involved, among other things, drastic cuts to benefits for the unemployed, with the aim of raising the rate of economic growth and lowering the rate of unemployment.

Neuss job agency adviser Martin Engwicht told the BBC that this policy meant that people who lost their jobs had some support financially, but the bulk of the money stopped after a year.

Basic support for the poorest continues, with help to pay rent and buy food, but higher support simply for being unemployed is limited.

"If you want money, you have to work," says Mr Engwicht. "If you are unemployed, you have to look for a job if you are able to work. We support you to find out what your skills are so you can find a good job."

But what if the unemployed person does not want the jobs on offer?

Image caption Neuss-Duesseldorf harbour is Germany's third-largest inland port

"There aren't so many people who say that, but there are rules: if you don't want to work, you aren't unemployed in the eyes of the law."

It should be said that there is debate about whether these changes - using a sharper prod to push the unemployed into searching harder for new jobs - are the reason for the relatively low unemployment.

A recent study - From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy - by Professor Christian Dustmann of University College, London and a team of economists from UK and German universities reckons the real secret of the German revival is the way wages are negotiated.

In Germany - unlike in France - wage deals are done in a very decentralised way, according to local conditions, rather than through big, centralised, industry-wide national negotiations.

Professor Dustmann said the changes made by the government 10 years ago would not have been enough to revive the economy.

"I don't believe the political process alone - had the autonomy of wage bargaining not existed - would have been able to achieve a similar degree of wage decentralisation in Germany, which ultimately led to the significant improvement in competitiveness that we have witnessed."

The difficulty for countries wishing to emulate Germany is that simply importing a system of wage negotiation is a very tall order indeed.

It involves a whole set of ways of behaving and attitudes towards work and employment, and you cannot just replicate that easily.

As the mayor said: "No money, no fun."

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