Prof. Dr. Oliver Falck

The ifo Institute in Munich turns 75 on January 24. It was born from a merger of two institutes: the Information and Research Center for Economic Observation; and the South German Institute for Economic Research, which Ludwig Erhard had founded in 1946. Today, it enjoys an international reputation for providing excellent economic research and policy advice.

Strong export surpluses as an expression of Bavaria’s economic strength are a thing of the past, according to a new study by the ifo Institute. The German state is parting ways with one of the hallmarks of its rapid postwar economic upswing. As of 2019, Bavaria is no longer a net exporter of goods; in other words, it purchases more goods from abroad than it exports. By 2022, its export deficit rose to an annual value of EUR 34.2 billion, pushed amongst other factors by unusual high energy prices. The data for 2023 is not yet fully available, but through November the deficit stood at EUR 9.5 billion. The ifo Institute assumes a long-term trend toward export deficits.

The business climate in Germany’s automotive industry has improved slightly. In September, the indicator rose to -14.7 points, up from -18.1 points* in August. “German automakers and their suppliers are satisfied with their current situation, but their expectations are still at rock bottom,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.

L'horizon s’éclaircit pour l'industrie automobile allemande. C’est le résultat des enquêtes conjoncturelles réalisées par l’Institut ifo. L'indicateur du climat des affaires est monté de —18,1* points en août à —14,7 points au mois de septembre. « Les constructeurs automobiles et leurs équipementiers se disent satisfaits de leurs activités en cours tout en restant foncièrement pessimistes sur l'évolution des prochains mois », constate Oliver Falck, directeur du Centre ifo de l'organisation industrielle et des technologies.

Employees in the German automotive industry are better qualified in e-mobility than employees in other Western countries. This is a finding by EconPol Europe researchers using data from the career network LinkedIn. In the German automotive industry, 6.2 percent of the employees on the online platform have skills in e-mobility. In the Italian automotive industry, the figure is 4.6 percent; in the US, 3.7 percent; in France, 3.3 percent; and in Spain, 2.4 percent. All values are based on employees’ self-reported data from 2023.

Policymakers should abolish the electricity tax to promote electromobility in Germany. This is the recommendation of an expert synopsis by the ifo Institute for the Chamber of Industry and Commerce for Munich and Upper Bavaria. “That might make the transition to electromobility more affordable,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. At the same time, policymakers should refrain from sector-specific subsidies, such as purchase premiums or a subsidized electricity price for charging electric cars.

The current business situation for German automotive manufacturers has improved significantly, according to the ifo Business Survey. In June, the indicator climbed to 37.5 points, up from 28.4 points* in May. Expectations, however, fell to -56.9 points, down from -10.3 points* in May. “Automakers are experiencing great uncertainty, comparable to the early days of the war in Ukraine or to when the risk of gas rationing in manufacturing shot up last fall,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. 

Even though more people are working from home, German city dwellers are once again stuck in traffic. The number of hours spent in traffic jams each year has decreased only in some cities, but even there it remains at a high level. It therefore makes sense for cities to take measures to control motorized individual transport. This is according to an article published in the latest ifo Schnelldienst. “Actions should focus on solving local problems. This includes reducing congestion and reallocating cities’ scarce space,” writes Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.

Retail sales in German city centers remain below pre-pandemic levels, finds a recent study conducted by the ifo Institute for the Berlin, Munich, Hamburg, Stuttgart, and Dresden areas. “In March 2023, private spending in the city center was still 5% lower than in 2019. At the same time, residential areas and suburbs recorded strong gains in sales,” said Oliver Falck of the ifo Institute. Consumer spending rose by up to 30%, particularly in areas where many people could work from home. 

The business situation for German automotive manufacturers and their suppliers has improved slightly, finds the latest ifo Institute survey. In April, the indicator for manufacturers rose to 23.7 points, up from 19.3 points* in March. For suppliers, it rose to 35.2 points, up from 34.6 points*. “Automotive suppliers are still much happier with their current situation than manufacturers,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. 

The business situation for German automotive manufacturers and their suppliers has improved significantly, finds the latest ifo Institute survey. In March, the indicator rose to plus 23.7 points, up from plus 7,6* points in February. “Both automakers and their suppliers assessed the current situation as better,” says Prof. Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. “The suppliers’ business situation is actually better than the automakers’ – which has been rare in the last two years.”

Companies are particularly keen on employees with digital skills, finds an ifo analysis of 1.8 million online job advertisements from companies in Munich and Upper Bavaria in the period from 2019 to mid-2022. Digital skills were required in 70 percent of the job advertisements evaluated. “In addition to specialist knowledge, it is increasingly important for employees to have skills that enable them to adapt to technological change,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.

According to figures from the German Federal Employment Agency, Germany’s automotive industry has lost 9% of its manufacturing jobs. This is what Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies, writes in a recent article for ifo Schnelldienst. “We are seeing a deindustrialization of the automotive sector caused by the transition to e-mobility. Battery manufacturing, software services, and digital business models already offset part of the loss and could increasingly do so in the future,” Falck says. However, shifts in competition – especially with China and the US – will be more decisive for German automakers’ future levels of manufacturing, he says.

The business situation for German automotive manufacturers and their suppliers has worsened slightly, finds the latest ifo Institute survey. In February, the indicator for this industry fell to plus 6.0 points, down from plus 12.5 points in January. “Manufacturers in particular assess their current situation as drastically worse than in the previous month. This presumably has to do with the fact that buyers are being very cautious at the moment,” says Prof. Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. Suppliers, on the other hand, rate their current situation as better than in the previous month.

The business situation for German automotive manufacturers and their suppliers improved significantly in January, finds the latest ifo Institute survey. In January, the indicator rose to plus 14.1 points, up from plus 3.4 points in December. Expectations are positive for the first time in five months, rising from minus 4.9 points in December to plus 10.7 points. “However, export expectations fell considerably,” says Prof. Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.

The business situation for German automakers and their suppliers remains strained in December, finds the latest ifo Institute survey. In December, the indicator rose to plus 1.5 points, up from minus 1.5 points in November. “Overall, the German automotive industry appears to be in a better position today than in late summer 2022,” says Prof. Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. However, expectations for the coming months remain cautious. As late as September, the automotive industry was still expecting earnings to plummet in the second half of the year.

Germany’s management consultancies are particularly likely to have staff working from home, according to ifo Institute surveys. In November, the proportion of people in that sector who work from home at least some of the time rose to 72.5 percent, up from 71.5 in August. Remote working is also widespread among IT service providers (71.7 percent) and in advertising and market research (60.4 percent).

Sentiment among German automotive manufacturers and their suppliers improved somewhat in November, finds the latest ifo Institute survey. The indicator rose to minus 2.2 points, up from minus 4.3 points in October. The indicator for business expectations surged to minus 13.3 points, following minus 35.3 in October.

Freelance knowledge work is more heavily regulated in Germany than in other countries as well as being comparatively less appreciated in society. These are the findings of a new ifo study on knowledge workers such as IT and communication professionals as well as engineers and accountants. “Rather than harness the potential of freelance knowledge work as a driver of growth, Germany puts many obstacles in the way of freelancers,” says Oliver Falck, one of the study’s coauthors. These obstacles include bureaucracy, barriers to start-ups, hurdles in acquiring external funding, as well as legal gray areas when it comes to solo self-employment.

Business expectations in Germany’s automotive industry darkened in October, finds the latest ifo Institute survey. The figure plummeted to minus 35.3 points in October, down from minus 6.3 points. “Worries about a collapse in demand are now gripping automakers and their suppliers,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. For example, manufacturers’ orders (minus 26.2 points) and demand (minus 38.1 points) are both lower than in September. In the industry as a whole, the assessment of the current situation fell – but only from minus 5.1 points to minus 5.7 points.

Older employees can catch up on digital skills through appropriate training. This is shown in a new study by the EconPol research network, which examines these skills among different age brackets in industrialized countries. Two-thirds of the international differences can be explained by differences in the extent to which countries invest in equipping this group with digital skills.

Business was somewhat better in the German automotive industry in September. The indicator for the industry rose to minus 5.4 points, up from minus 9.8 points. This is a finding of surveys by the ifo Institute. However, expectations dropped to minus 4.0 points, down from minus 0.6 points. “The automotive industry’s manufacturers and suppliers have a different take on the future,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. 

The current situation in the German automotive industry deteriorated sharply in August. In the ifo survey, the value of the indicator fell to minus 10 points, down from plus 7.5 points in July. Expectations, however, brightened somewhat, from minus 4 points to zero. This is the first time since April that the overall climate was below zero.

The business situation for German automakers deteriorated in July, with the indicator falling to 20.5 points, down from 22.4 points in June. This is the result of the latest ifo survey. “Car manufacturers appear to have run out of options for passing on rising material costs to consumers,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. Price expectations plummeted to 38.6 points, down from 73.1 points in June.

The business situation for German automakers improved somewhat in June, with the indicator rising to 23.6 points, up from 17.8 points in May. “Automotive manufacturers continue to command high sales prices,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. The indicator for price expectations remained high at 74.7 points, down from 80.5 points in May.

German automotive manufacturers’ expectations improved significantly in May. The indicator rose from minus 20.5 points in April to plus 38.0 points. “Automotive manufacturers continue to command high sales prices while expecting only minimal further constraints caused by the situation in Ukraine,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. The indicator for price expectations remained high at 82.6 points, down from 86.1 points in April.

German automotive manufacturers’ expectations deteriorated further in April. They fell to minus 30.4 points, down from minus 21.8 points in March. “Carmakers are uncertain due to the war in Ukraine,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. Expectations have also worsened among suppliers, falling from minus 39.8 points to minus 44.3 points.

In March, German automakers and their suppliers slashed their expectations like never before. The indicator for the entire industry plummeted to minus 43.1 points, down from plus 14.4 points in February. 

It is unclear how the situation for German automotive manufacturers will develop in view of the conflict in Ukraine. “Our latest data doesn’t yet reflect the most recent escalation in Ukraine,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. “BMW and VW plants are at a standstill because there is now a shortage of wiring harnesses due to the Ukraine war.” Most recently, the ifo indicator for the entire industry rose to plus 18.3 points in February, up from plus 7.4 points in January.

Overall, the situation in the German automotive industry has improved slightly. The ifo indicator for the industry rose to plus 4.6 points in January from plus 0.8 points in December.

The situation in the German automotive industry has darkened for five months in a row. The corresponding balance fell to minus 1 point in December, down from plus 7.9 points in November. “This further worsening is driven by manufacturers, not suppliers,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. The situation indicator for manufacturers plunged to 15.6 points, down from 36.5 points in November.

The situation in the German automotive industry has worsened. The ifo indicator slid to 9.6 points in November, down from 17.4 points in October. The downward trend is primarily due to the situation for suppliers. “Automotive suppliers gave much bleaker assessments of their current situation than manufacturers,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. The index for suppliers fell to minus 23.0 points.

An ifo study commissioned by the Chamber of Industry and Commerce for Munich and Upper Bavaria points out a great deal for the new German government to do in the area of digitalization. “In an international comparison, Germany has so far shown a clear tendency to remain in midfield when it comes to digitalization,” says ifo expert Oliver Falck, the study’s author. 

The business climate in Germany’s automotive industry has worsened slightly. The ifo barometer for the industry fell to 8.5 points, down from 9.8 points in September. In July, the indicator had stood at 28.7 points. “Manufacturers and their suppliers have very different takes on the current situation,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. 

Germany has only around 4 freelance knowledge workers for every 100 employees. The leaders are Belgium (10), South Korea (around 10), and Italy (around 9). “Since knowledge workers play an important role in the innovation process, this means Germany is giving away growth potential,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. He is one of the authors of this study, which quantifies the growth impact of freelance knowledge work on behalf of the German Association for Freelance Knowledge Work (Bundesverband für selbständige Wissensarbeit).

Sentiment among German automotive manufacturers and their suppliers cooled noticeably in September, with the corresponding ifo indicator plummeting from 32.0 points to 13.2 points. In July, the figure had stood at 52.9 points. “The latest figures show that the automotive industry is the industry most seriously affected by supply bottlenecks for intermediate products,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.

Research funding via the tax system has a positive effect on investment in innovation projects. This is the finding of a metastudy conducted by the ifo Institute that summarizes findings on quantitative evaluation studies in Europe, Japan, Canada, China, Australia, and the United States

Sentiment among German automotive manufacturers and their suppliers cooled noticeably in August ahead of the IAA, with the corresponding ifo indicator plummeting from 56.4 points to 28.8 points. This is its lowest level since April. “This shows, that the automotive industry is still suffering from supply bottlenecks in intermediate products, especially chips,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.

Over the past few years, the German automotive industry has been putting much more value on digital skills among its workforce than before. This is according to a survey by the ifo Institute and the professional networking site LinkedIn. In particular, digital skills in cutting-edge technologies such as autonomous driving are on the rise. Among all skills added to LinkedIn profiles, the proportion of these skills has doubled from 6.5 percent in 2015 to 13.3 percent in 2020.

The proportion of employees working from home in Germany has fallen slightly. This is according to a monthly ifo Institute survey. It found that in August, the proportion of employees who worked from home at least part of the time fell from 25.5 percent to 23.8 percent. “As the number of vaccinated people increases, more and more employees are returning to the office. However, the drop in people working from home in August is less pronounced than in previous months. This indicates that the proportion is likely to stabilize at a level higher than before the pandemic,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.

Business was better for German car manufacturers and their suppliers in July than the previous month. The ifo indicator for the industry’s business situation rose from plus 44.9 points in June to plus 56.8 points. This is its highest level since July 2018. Expectations rose slightly from 3.6 points in June to 6.3 points.

Consumers in Germany are once again spending more money on trips to other European countries. This is a finding of a recent analysis by the ifo N26 Economic Monitor. “As the 2021 vacation season kicks off in Germany, consumers are once again feeling the urge to get away from it all. Nevertheless, for many, the incalculable risks of long-distance travel during a pandemic are too high. These include travel bans, mandatory quarantine, and inconvenient or uncomfortable Covid-19 rules at the destination,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.

Germany needs a public debate on what growth-friendly data protection could look like. This is what Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies, writes in an article for ifo Schnelldienst. “As a raw material, data holds great growth potential. Public data in particular, such as maps, weather data, satellite images, or statistical data, provides the basis for innovative business models, for example for navigation systems, weather forecasts, mobile applications, or financial and insurance services,” Falck says.

Business was much better for German car manufacturers and their suppliers in June than the previous month. The indicator for the industry’s business situation rose from plus 37.8 points in May to plus 44.2 points. This is its highest level since August 2018. In contrast, the indicator of expectations increased only slightly, to plus 3.2 points in June from minus 1.6 points in May.

Some 60 percent of non-remote employees in Germany are getting tested for the coronavirus in the workplace, according to the ifo Business Survey for May. “With around 70 percent of employees back at work on-site, testing there is an important way to combat the pandemic,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. “This covers contacts not only in the workplace, but also on the way there. Especially in areas with a heavier coronavirus caseload, employers should encourage their employees to get tested more often at work.”

In the coming years, the number of German automotive jobs eliminated as the output of combustion engines shrinks will be higher than the number of employees retiring from the industry. This is the finding of a study conducted by the ifo Institute on behalf of the German Association of the Automotive Industry (VDA).

German consumers are increasingly getting used to buying clothing, household goods, and home appliances online. This is a finding of a recent evaluation by the ifo-N26-Economic Monitor. The researchers compared offline and online purchases in 2020–2021 to the pre-pandemic situation. When stores began reopening in summer 2020, the ratio of offline to online trade almost returned to pre-crisis levels. Since then, online sales have grown nearly continuously, reaching 250 percent of pre-crisis levels for household appliances at the beginning of December and as much as 350 percent in February.

In March, 31.7 percent of employees at German companies were working from home part- or full-time, according to the latest survey conducted by the ifo Institute. “Germany still has a lot of room for improvement in this regard. We estimate that 56 percent of employees could potentially work from home,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. In February, the ifo Institute calculated Germany’s proportion of remote workers to be 30.3 percent.

Les constructeurs automobiles allemands et leurs sous-traitants s’attendent à une dégradation de leurs affaires au cours des prochains mois. Au mois de novembre, l'indicateur correspondant a baissé pour le quatrième mois d'affilée, reculant de + 16,3 points en octobre à – 4,0 points en novembre. C'est ce qui ressort de l'enquête conjoncturelle la plus récente de l'Institut ifo. Les entreprises de ce secteur ont estimé cependant que leur situation actuelle s'est améliorée. Cet indicateur est monté de – 2,0 points au mois d'octobre à + 7,2 points en novembre. « Si la situation actuelle reste satisfaisante, les entreprises jugent leurs perspectives d'avenir peu réjouissantes », constate Klaus Wohlrabe, directeur des enquêtes conjoncturelles de l'Institut ifo.

The expectations of German automakers and their suppliers for the coming months have clouded over. In November, they declined for the fourth month in a row, falling from plus 16.3 points in October to minus 4.0 points. This is the finding of the ifo Institute’s latest Business Survey. However, the companies assessed their current business situation as better. This indicator rose from minus 2.0 points in October to plus 7.2 points. “Business is satisfactory for now, but what companies see in their future isn’t cheering them up at the moment,” says Klaus Wohlrabe, Head of Surveys at ifo.

An anti-congestion charge of EUR 6 per day could reduce traffic in Munich inside the city’s Middle Ring Road by 23 percent. At EUR 10, the reduction would even be 30 percent. This is the finding of a study produced by the ifo Institute together with consultants Intraplan Consult and with financial support from the Chamber of Industry and Commerce for Munich and Upper Bavaria. “This would let us get to grips with the problem of downtown traffic jams,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. “We assume that the results will also be applicable to other congested cities.”

Just over half (54 percent) of companies in Germany want to put working from home on a more permanent footing. This is according to a study by the ifo Institute, published in the latest edition of ifo Schnelldienst. Input for the study includes evaluations of data from current ifo company surveys and a survey by professional networking service LinkedIn of its members. “The coronavirus crisis could give working from home arrangements a lasting boost,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies and coauthor of the study.

The coronavirus crisis is having a significant impact on companies’ demand for labor and is leading to a boost in digitalization in Germany. This is the finding of a joint evaluation by the ifo Institute and the LinkedIn social network. According to the study, from March to May the number of job ads on LinkedIn in software and IT services rose by 21 percent compared to the same period last year. In the health sector, this figure shot up by 46 percent.

Germany has laid the key foundations for the rollout of the 5G networks. This is the conclusion drawn by Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies, in a recent article. “With its ambitious coverage obligations, Germany is taking on a pioneering role – both for the nationwide rollout and for rollout along road and rail lines,” Falck says.

Around 55,000 jobs at Bavarian automotive suppliers are at risk thanks to electric cars, finds an ifo Institute study commissioned by the Bavarian Chamber of Industry and Commerce (BIHK). This is in addition to thousands of jobs at the manufacturers themselves.

Digital skills are becoming more widespread in German industry. This is shown by a new study conducted by the ifo Institute together with the LinkedIn Economic Graph Team on the basis of data from the LinkedIn professional network. Since 2016, more and more industry workers have been listing digital skills on their CVs.

Das ifo Institut begrüßt die geplante steuerliche Förderung von Forschung in Unternehmen. „Der Erfolg oder Misserfolg der Regelung wird maßgeblich von ihrer Ausgestaltung abhängen. Es besteht aber die Gefahr, dass Unternehmen allgemeine Personalausgaben in Personalmittel für Forschung und Entwicklung umdeklarieren“, schreiben Oliver Falck, Anita Fichtl und Tobias Lohse in einem Beitrag im aktuellen ifo Schnelldienst (9/2019).

L'Institut ifo se montre critique à l'égard de la nouvelle stratégie industrielle du gouvernement allemand. "Cette stratégie de politique industrielle comporte des dangers et néglige les conditions particulières de l'Allemagne en tant que site économique", déclare le président de l'ifo, Clemens Fuest. "L'orientation vers la politique industrielle de la Chine est trompeuse, car la Chine est encore un pays qui rattrape techniquement son retard dans de nombreux secteurs. Une politique industrielle axée sur l'exportation peut accélérer ce développement." Oliver Falck, chercheur de l'ifo, déclare : "L'industrie allemande, quant à elle, se déplace à la frontière technologique mondiale. Les recherches sur les stratégies de politique industrielle montrent que dans une telle situation, une concurrence féroce et la pression au changement sont beaucoup plus importantes pour le succès, surtout pour les grandes entreprises.

The ifo Institute takes a critical view of the German government's new industrial strategy. "This industrial strategy harbours dangers and neglects the special conditions of Germany as a business location," says ifo President Clemens Fuest. "The orientation towards China's industrial policy is misleading because China is still a country that is catching up technically in many sectors. An investment steering industrial policy with a strong export orientation can accelerate this development." The ifo researcher Oliver Falck says: "German industry, on the other hand, is moving at the global technology frontier. Research on industrial policy strategies shows that in such a situation fierce competition and pressure to change are far more important for success, especially for large companies.“