Financial analysis organizations issue alerts about customized financial aid for Volkswagen
Top economic research institutions in the nation have warned against special interventions for VW and Germany's automotive sector in total. According to Stefan Kooths from the Kiel Institute for the World Economy (IfW Kiel), the answer can't be "saving specific firms or even entire sectors through fresh help packages or subsidies," as Kooths stated in Berlin on Thursday. On the same note, Oliver Holtemoeller from the Leibniz Institute for Economic Research Halle (IWH) suggested letting the natural transformation happen.
Proposals for solutions like a scrappage incentive are "financially irresponsible," mentioned Kooths. "This would mean getting rid of existing goods to replace them," he argued. Instead, there's a need for comprehensive enhancements in political policies.
The experts disapproved of helping individual firms or locations in general. "There's always a risk that the businesses receiving the most attention will come out on top," warned Holtemoeller. "The rest would bear the burden through higher taxes, which will eventually become necessary."
He also highlighted the fairly "sound" labor market overall. The real challenge for German companies is the lack of qualified workers, said Holtemoeller. "The transformation implies that employment conditions will change," added Kooths. Mass layoffs due to factory shutdowns are unfortunate, but the government must support those affected, "but not primarily the shareholders" of the company.
Especially, Germany's automobile industry and its key representative in the country, Volkswagen, are grappling with difficulties. Dropping sales, particularly for electric vehicles, and high investment expenses for electric vehicle development are posing challenges for the sector. At VW, job cuts and factory closures are being considered.
The experts suggested against special interventions due to the risk of favoring certain firms or locations, advocating instead for a natural transformation or structural change. This structural change implies that employment conditions will evolve, and the government should primarily support affected individuals rather than shareholders.
