Germany contemplates its IT navel

Schadenfreude, angst? German IT leaders got the lot

Analysis Laptop and lederhosen are more closely integrated in Bavaria, the epicentre of the German IT industry, than in Hanover so it's surprising that CeBIT hasn't moved south to Munich. But there are increasing signs of resentment about this. CeBIT has become the biggest trade show in the world, with around 650,000 visitors, and has paid for a good share of the expansion of the Hanover site of Deutsche Messe. Before CeBIT Home was spun off a few years ago, and CeBIT "re-professionalised", attendance had passed 700,000 and would be close to a million had the split not been made. The show closes today, and next year it will be at the end of February because of some Y2K nonsense. This CeBIT was notable for some franker-than-usual discussion of technology issues in Germany. Roman Herzog, the German president, said at the opening that the negative image of the entrepreneur that developed in the 1970s had resulted in people opting for personal security of employment and a resistance to taking risks. In the early 1990s, the proportion of self-employed people in Germany was 7 per cent, a historic low. This stimulated German government action, with the result that there are now around 10 per cent self-employed, and several university departments teaching entrepreneurial skills. Herzog was critical of the attitude of German banks, which have a stranglehold over the German economy since the stock market is small. The banks are now better at backing entrepreneurs, Herzog suggested, but still have an aversion to supporting an entrepreneur who has already failed. In the US, initial failure is often regarded as a useful lesson that results in more realistic plans by second-time entrepreneurs. Some of them are even to be found at Microsoft, as the result of a policy decision. Peter Fisher, the Lower Saxony minister of technology, was delighted that "the major proportion of mobile phones are now produced in Germany - and not in low-wage East Asian countries". For some reason this reminded us of the immortal lines: "Cannon to the right of them, cannon to the left of them, cannon in front of them, Volleyed and thundered", but we doubt that Herr Fisher would get the joke. Both Herzog and Fisher ranted on about falling telecoms costs, but side-stepped the obvious conclusion that despite some small efforts at producing a competitive market, Deutsche Telekom (along with partner France Telecom) were still two of the most monopolistic organisations in Europe, European Commission or no Commission - well the latter actually. It is after all not insignificant that the Commission was monstrously incapable of policing and enforcing the proper privatisation of the these telco hydras. Hans-Olaf Henkel, president of the National Association of German Industry, finally put the boot into the German situation with an outspoken analysis of the German situation that was not entirely well-received by the German audience. He didn't like the fact that Germany had a DM 128 billion trade surplus in 1998, but a chronic IT trade deficit of DM 15 billion. The deficit argument was similarly viewed in the UK some twenty years ago, but the hopelessness of successive governments to influence this was shrugged off and, as it happened, a software and services industry developed as a countermeasure. Henkel wasn't pleased that per capita ownership of PCs was lower in Germany than in other industrialised countries. Germany spends less on technology as a percentage of GDP (4.5 per cent, about the European average) than the USA (7.6 per cent) or the UK (6.4 per cent). German schools have few PCs (20 per cent are linked to the Internet, compared with 80 per cent in the USA), although judging from some of the PC software for education, the benefit is mostly in manual dexterity at the expense of reading. With officially more than 4 million out of work in Germany (some say nearer 7 million), there are at present 75,000 vacancies in the German IT sector. There has been a myth that the German federal system of government works well, but Henkel drew back the curtain. Regional education ministers had been politically deadlocked for years, with educational reform taking place at the pace of the slowest minister. So what's Henkel's answer? "One learns to become competitive by competing." [That is a gem: and it certainly has application to the UK, where competitive sport and educational elitism have been unfashionable, at least until last week. Meanwhile in the US, the school curriculum reads more like a sales training prospectus than an educational programme.] The cause of many of Germany's difficulties are the industry associations and trade unions, Henkel said, with uniform national pay scales (and very high social costs) not taking account of different living costs. Henkel had some advice for the government, some of which was based on bizarre examples such as Clinton and Gore's "information society" political slogan, and Tony Blair's declaration that the millennium bug was a matter of national importance. So, Henkel concluded with that infallible German logic, "as a result, computer industry experts believe Great Britain has less reason to worry at the turn of the century than other countries". So that's all right then. That alleged-German efficiency turns out to be achieved through electromechanical devices rather electronic ones, it appears, at least at the top. How quaint that in the office of the federal chancellor, "messages are still delivered by pneumatic tube". The Finnish president, Henkel noted, spends considerable time answering emails from Finns. It was hostility towards technology in the mid-1980s that Henkel blames for German backwardness in the acceptance of technology. It was not nuclear power or genetic engineering that excited protestors, but computers, although a child-led revolution has largely overturned this. Henkel's final plea was directed against recent unpopular fiscal measures in Germany, the monstrous public debt that arose largely as a result of social services expenditure, and the under-investment in education. That sounds familiar. ®

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