Q&A: Dr. Ludger Schuknecht, Ministry of Finance, Germany

By on 03/10/2015

Dr. Ludger Schuknecht is chief economist and director-general for strategy, international financial monetary policy at Germany’s Ministry of Finance.  

Please describe your role. What is the focus of your job? What objectives do you work towards and how many members of staff do you oversee? I am the head of the Directorate-General at the Federal Ministry of Finance which is responsible for economic and fiscal policy strategy as well as the international economy and finance. My staff of around 140 people conduct comprehensive macroeconomic and fiscal analyses and projections that are used to shape fiscal strategies. To give you a prominent example, the directorate-general created the concept for the constitutional balanced budget rule, the so called debt brake. Moreover, the directorate-general participates in the tax revenue estimates that take place twice a year. My role and the role of my directorate-general is to give substantiated advice to the federal minister of finance and the state secretaries on fiscal and economic issues. Moreover, I represent the federal ministry at different meetings and fora, e.g. at G20 meetings or as a member of the supervisory board of the German development organization GIZ.

Do you have any responsibility for hiring/firing/promoting civil servants? The staff of the federal ministry is in principle hired by the central administration department but I am, of course, involved in the process of selecting and hiring staff for my department. The central administration department ensures that all rules and regulations for hiring civil servants are followed whereas I and the heads of division of my department look at the qualifications of the applicants. Promotions are based on regularly conducted individual evaluations of staff. I am responsible for the evaluations in my department which look at performance, qualification and competence. The central administration department, again, makes sure that rules and regulations for evaluations and promotions are met.

How were you appointed? Are people in roles similar to yours appointed by the finance minister or is it an open recruitment process? In Germany, the chancellor and the cabinet have to agree to the appointment of directors-general at the ministries. Usually, the relevant minister – in my case the minister of finance – recommends a qualified person for the position.

You have been in your current role for almost four years. What have been the biggest challenges you have faced in your role so far and how did you address them? A major challenge for me and my staff in the Ministry of Finance was to get the public finances of Germany back on track after the enormous deficits in the crisis years. We pledged ourselves to a strategy of growth friendly consolidation. An important milestone was passed in 2014, with the first federal budget without net lending since 1969. With this policy, Germany fulfils the European fiscal rules and serves as a stability anchor in Europe. A further main challenge has been the development of concepts and ideas for domestic economic and fiscal policy, for European policy and integration and for international economic and financial relations.

What do you think are the biggest fiscal and economic challenges the German government is currently facing? Demography is a major challenge for fiscal policy as well as for the economy and society. The effects of ageing will already be felt in Germany by 2020 when public spending on pensions and health care will rise significantly. There will be an increasing number of retirees while at the same time the working age population will decrease. We have to take this into account now in our fiscal and economic policy strategy. We already implemented reforms such as the increase of the general retirement age to 67 years from previously 65. Moreover, the growth-friendly consolidation of recent years promotes the sustainability of public finances. The implementation of the debt brake laid the foundation for sustainable public finances. Now, it is vital to stick to the rules and achieve structurally balanced budgets to reduce public indebtedness and prepare public finances for the future. But we have to do more in order to meet the demographic challenge. Labor participation, especially of women and the elderly, needs to be increased. Migration can also help to stabilize the social security system and to avoid a shortage of skilled workers. In the short term, the biggest challenges are safeguarding public finances against all the pressures for more spending in “good times” and preventing complacency.

You have significant experience having worked for the ECB, and the World Trade Organisation. What attracted you to work for the German government? To be chief economist under a historic minister is a great job at exciting times.

Tell me about your academic career: what made you decide to go to Munich, then the U.S., and Konstanz for university? Munich is a great city. In the US, I specialised in the field of economics I liked very much, i.e. public choice with e.g. Nobel Laureate James Buchanan, and in Konstanz I earned my Ph.D. in international economics.

What do you like doing in your free time? Being with my family, reading, playing football.

 

CV highlights

1985 – obtains a ‘Vordiplom in Economics’ from Munich’s Ludwig‐Maximilian University

1988 – graduates from George Mason University, USA, with an M.A. in economics

1992 – obtains Ph.D. in economics from the University of Konstanz, Germany, and appointed economist for fiscal affairs and african departments at the International Monetary Fund in Washington D.C.

1997 – joins the World Trade Organization in Geneva as economist in the research and analysis division

1999 – joins the European Central Bank as principal economist and head of the fiscal policy analysis unit and later assumes varies roles including that of head of fiscal policy division in the directorate general-economics

2011 – appointed chief economist and director-general for strategy, international financial monetary policy, Ministry of Finance, Germany

About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

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