Service industry

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The service sector - which encompasses a vast spectrum of business activity including trade, hotels and restaurants, transport, communication, credit and insurance, corporate services and more - is a major driver of economic growth in Germany. Today the service industry accounts for nearly 70% of GDP and the labour market, with employment expanding most rapidly in the financial, rental and corporate services sectors.

The OECD has divided the service industry into the following areas:

• Distribution services (commerce, transport, information)

• Business services (financial services, leasing)

• Personal services (hospitality, culture, sport, household)

• Social services (state, health, education, religion)

Structural change: the shift toward a service society

In the most developed economies, more than two thirds of economic activity is concentrated in the service sector. This necessitates a profound reorientation of policy; including the development of different professional curricula, the increased decentralisation of work processes and the promotion of innovative skills. Demographic changes play a key role in accelerating these trends.

Significance for the economy as a whole

Since it accounts for 70% of GDP and the labour market, the service sector is the driving force of economic growth and employment as well as business start-ups. Business and personal services are the sectors experiencing the most rapid growth, while distribution services are tending to stagnate and social (state) services are on the decline.

Internationalisation

The forces of globalisation and the liberalisation of the international trade in services under the General Agreement on Trade in Services (GATS) are geared above all toward business and infrastructure services. Modern information technology makes trade possible regardless of space and time. The German Government supports the efforts of technical service providers to cooperate with foreign partners, in order to help create greater opportunities for German companies on international markets.

Public-Private Partnerships (PPP)

Public-private partnerships and privatisation create new alternatives for meeting the demands of a changing and globalising economy. The increased use of PPPs can serve to spur greater investment in Germany. At the same time, companies can use the experience gained in German PPP projects as a stepping stone to success in international competition.

EU Internal Market

In order to help the European Union meet the Lisbon objective of making the EU the most competitive economic area in the world, the EU seeks to remove the remaining barriers to the exchange in services in order to tap the service sector's full potential for fostering growth and employment. The most important component of the internal market strategy for the service sector is the EU Services Directive, which was adopted in December 2006 and is to be implemented by the member states by the end of 2009.

Innovation and standardisation

Expanding service markets create a need for innovative service products. The German Government's support of innovation and research specifically targets the development of new services.

The rapid expansion of the international trade in services is accompanied by increasing demands for the comparability and compatibility of services. This is leading to the creation of international standards, specifications and quality seals within the service industry.