The social market economy is the underlying principle of German economic policy. This principle means that there is a strong government that is able to act, that gets involved to defend the common good, a government that promotes the wellbeing of the people, that enforces rules and provides for a reliable framework and that does so in order to work for a dynamic and competitive economy whilst at the same time ensuring that those working for the values of our society share in its benefits. This is key for preparing Germany for the future and for providing a good quality of life for all.
If we want the social market economy to remain successful, we need to continue to face up to the challenges of the future by working productively and engage in intensive dialogue with civil society, the business community and the trade unions. Economic success will be more sustainable if as many people as possible share in its benefits.
It is for this reason, that, at the beginning of this legislative term, the Federal Ministry for Economic Affairs and Energy launched an extensive dialogue process, asking people what it means to lead a good life in Germany and what it is that they find particularly important in our time. This process showed that the people in Germany attach particular importance to the issues of equal opportunities, social cohesion, gender equality and closing the gap between rich and poor in terms of income, education and healthcare.
Inclusive growth and social participation
One of the key reasons for why many people in Germany enjoy such a high standard of living today is that in the middle of the first decade of the new millennium, employment started to pick up again, and has developed very positively since then. There are now 43.5 million people in work, which means that unemployment has fallen to its lowest level in the history of the Federal Republic. In the last few years, Germany has seen solid economic growth, which has led to a sharp increase in purchasing power for large parts of the population.
In order to safeguard our prosperity and strengthen social cohesion in our country, the Federal Government is stepping up its investment, relieving municipalities of their burden, and improving the business environment for SMEs and start-ups. This is because investment and innovations are key for creating higher competitiveness, lasting prosperity and a better quality of life. A modern, efficient infrastructure forms the basis for future growth, as does investment in education, science and research.
The social market economy means investing in economic success, but also investing in improving social welfare – this includes providing for decent pension benefits, affordable housing, good schooling, dynamic cities and municipalities, and good public services. In order to strengthen integration and social cohesion in our country, the Federal Government has adopted an ‘integration package’ and a new ‘Solidarity Pact’. The goal of these initiatives is to put active labour market policies in place that help to integrate refugees into the labour market whilst at the same time giving the long-term unemployed new job opportunities, reviving social housing and providing more affordable housing for all people living in Germany.
Germany also promotes the principle of the social market economy at international level. This is necessary if we want to continue to maintain our high standards, promote inclusive growth and social inclusion, and provide a reliable framework for companies in a globalised economy.