Investment Environment
Competitive Production
Germany is an attractive production location thanks to high productivity, stable labor costs and advanced manufacturing processes.
High Productivity
In terms of nominal unit labor costs, Germany has gained in productivity over the past decade. While some European countries, especially in Eastern Europe, are showing a substantial increase in nominal unit labor costs of more than three, sometimes more than five percent, Germany has registered a moderate growth of two percent. As a result, Germany has become more competitive – particularly in manufacturing.
Stable Labor Costs
The labor cost difference between Germany and its neighbors in Eastern Europe has been reduced significantly. Since 2020, labor costs in manufacturing have been rising in the EU-27 member states at an annual rate of 2.7 percent. While labor costs in some EU countries – and particularly those in Eastern Europe – have been growing at an annual rate of more than five percent, labor costs in Germany have been increasing at a rate of just 2.0 percent.
Highly Automated Manufacturing
Production in German manufacturing is highly automated. According to the International Federation of Robotics, 397 industrial robots per 10,000 employees have been in operation in 2021. In absolute terms, 25,915 industrial robots were deployed in that year alone. Today, Germany is the European leader in industrial automation. Clients in the automotive and electronics industries are the primary beneficiaries of industrial robot installation.
