Germany’s highly urban and industrialized character is reflected in its employment patterns. Services, including trade and finance, account for the largest share of employment. At the turn of the 21st century, about one-fifth of workers were employed in manufacturing, and just over 2 percent were employed in agriculture-related industries.

Prior to World War II most German labor unions were organized along partisan lines. After the war, however, trade unions were reconstituted to represent an entire industrial branch rather than simply a single trade or skill, thus avoiding interunion jostling within plants, and an independent German Trade Union Federation (Deutscher Gerwerkschaftsbund; DGB), which represents nearly all the country’s unionized industrial employees, was established. The federation is an agglomeration of mostly blue-collar unions (though there are some white-collar unions), the largest of which are the United Service Industries Union (Vereinte Dienstleistungsgewerkschaft), the Metalworkers’ Union (IG Metall), the Public Services and Transport Workers’ Union (Gewerkschaft Nahrung-Genuss-Gastätten), the Mining, Chemical, and Energy Union (Industriewerkschaft Bergbau, Chemie, Energie), and the Federation of Civil Servants (DBB–Beamtenbund und Tarifunion).

Although Germany’s social economy allows collective bargaining, unions are generally viewed as partners rather than opponents of business. The common interests of management and labor are expressed in works councils. Labor also has a right of codetermination (Mitbestimmungsrecht) through representation on managerial boards. About one-third of all German workers belong to a trade union. German’s average labor costs are among the highest in the world.

Taxes are the major source of revenue for all levels of government. Five types of taxes—value-added, wage, assessed income, energy, and corporate—account for nearly four-fifths of all revenues. The federal government and the states each receive more than two-fifths of the principal taxes, leaving the remainder for local councils. A host of lesser taxes are specific to either the federal level (such as the tax on tobacco and alcohol and customs duties), the states (tax on beer and motor vehicle licenses), or the local authorities (tax on real estate, trade, and public entertainment). The states also benefit from property taxes. Because the taxing potential of the states is unevenly distributed, the economically weaker or smaller states share in the tax revenue of the richer or more populous states through a process of “horizontal financial equalization,” which became an especially controversial matter after unification, when the poorer eastern German states became entitled to subsidies from western Germany. The federal corporate tax rate is about 25 percent, and, when local taxes are included, the overall tax burden reaches about 40 percent. Germany imposes a value-added tax of 16 percent to most goods and services. To spur economic growth, the German government reduced personal and business taxes in the late 1990s.

The federal government is obligated to transmit certain revenues to the EU. Germany’s disproportionately large payments to the EU have become a significant domestic and EU-wide political issue. As one of the world’s richest countries, Germany feels obliged to supplement its regular contributions to the United Nations with complex international aid programs of its own.