Questions of trust in the economy

May 2015

"The greatest honor one can accord a person is trust." So claimed the German poet Matthias Claudius (also known as Asmus) well over 200 years ago. Most people around the world are guided by a similar philosophy and generally place their trust in others. In relation to the economy, trades perform best in the trust check – not only in Germany, but also in many countries around the world.

Armed conflicts, corruption and dodgy deals – there are many causes as to why trust can be shattered or even fully broken. However, the majority of people still state that they trust their fellow citizens: 69% of respondents subscribe to this notion. Canada (85%) and the Netherlands, Sweden and Spain (each 84%) are way ahead with regard to trust others. These are findings of the latest Global Trust Report 2015 undertaken by the GfK Verein for which approximately 29,000 interviews in 26 countries were conducted at the end of 2014.

Comparatively speaking, Germany is also at the top end of the table for this question: generally, 80% of respondents trust their fellow citizens. This puts Germany behind Spain, Poland and Switzerland in seventh place. It was often the case that the lower the perceived level of corruption in a country, the higher the levels of trust in others (add image in the download file): by this token, countries such as Austria, Australia, Belgium, the UK and the USA, but also South Africa, achieved above-average scores of between 70% and 80%. Perceived levels of corruption (according to Transparency International, CPI 2014) in most of the countries listed above are low. Conversely, in France, Indonesia, Russia, South Korea and Turkey, trust in others is below average, with respondents in these countries accordingly viewing levels of corruption as greater. Corruption is regarded to be a serious problem in Brazil, Kenya and Nigeria, where less than half of the population trust their compatriots, and these countries consequently bring up the rear in the rankings for trust. However, despite low levels of perceived corruption, less than 50% of Japanese respondents expressed trust in other people.

Trade successfully defends top spot

So, what does this mean for the economy in these countries? How trustworthy are different industries considered to be? The world map of trust reveals that trades lead the way: in eight of the 26 countries surveyed, consumers place their trust in the plumbers, electricians, carpenters and bricklayers in their country. This industry is not only in first place in Belgium, Canada, Germany, Spain and the USA, receiving top ratings of over 80%, but also in Austria, Italy and Turkey.

Consumer electronics in second place worldwide

Manufacturers of consumer electronics and household appliances also find themselves in consumers’ good graces. In four countries – Russia, South Korea, Sweden and the UK – respondents were of the view that manufacturers of games consoles, washing machines and TVs are reliable and trustworthy. From a global perspective, third place in the most trustworthy industry awards is split between the pharmaceutical industry and retail. Drug manufacturers were awarded high values of between 65% and 85% in emerging markets such as Brazil, Indonesia and Egypt. Evidently, an improved supply of medication at low cost for the population has had a positive influence on the image of the industry.  In terms of retail, the Netherlands lead the way at 87%. However, France (80%) and Argentina (65%) also awarded this sector top mark in the trust survey. 

Food industry: way ahead in Africa

Energy and water suppliers have at least managed to achieve first place in two countries: respondents in Poland and Switzerland most often expressed their trust in this industry. And the food industry is top of the rankings in two countries as well, namely South Africa and Nigeria. Banks and insurance companies, the automotive industry, telecommunications and internet providers as well as airlines are also represented on the world map of trust, although these industries were each only perceived as being the most trustworthy in just one of the countries surveyed.

Germany: ongoing trust in trade

“A trade in hand finds gold in every land” – in Germany, this old adage not only applies to full order books for painters, electricians and plumbers, but also in terms of trust. Trades are rated as trustworthy by 85% of German respondents. That is 39 percentage points higher than in Egypt, the country with the lowest trust rating for tradesmen. In second place for German respondents, each with 74%, are consumer electronics and household appliances manufacturers and airlines. Around three quarters of German respondents believe the various airlines operating in Germany to be reliable. However, this data was processed before the German Wings crash in the French Alps. It remains to be seen how this event will affect respondents and whether it will have a lasting impact.

Germans skeptical toward IT, food industry and the financial sector

German cars are popular and sell well – not just outside Germany. The German automotive industry clearly has a positive image on the domestic market too: 70% of German respondents trust brands such as Audi and BMW, which is almost twice the amount of the lowest scoring country for this sector, Turkey. Retail (69%) as well as energy and water suppliers (61%) both achieve similarly good figures. In contrast, the pharmaceutical industry and software and computer manufacturers perform less well. With scores of just above 50%, they make up the midfield. At the other end of the spectrum are telecommunications and internet providers, with considerably less than half of German respondents expressing trust in this industry. It is probable that discussions on data protection have given rise to incertitude among German consumers. This is also true of food scandals which have regularly caused concern among consumers. Overall, 45% of German respondents have trust in the food industry and Germany therefore is behind other countries, despite its higher standards of quality. In India, for example, 90% of people trust food manufacturers. However, at least the Germans are not alone in their skepticism, with just a third of consumers in neighboring France having trust in the food industry. Banks and insurance companies fare worst in Germany, because a large degree of trust simply fell by the wayside in the wake of the financial crisis: just a third of respondents expressed their trust in these institutions.

Country comparison: the Swiss are very trusting

A look at a selection of countries such as Brazil, Italy, Russia, Switzerland and the USA shows just how wide the spectrum of trust can be. Trust in the economy is evidently highly dependent on the political and economic conditions in a country, as the average trust ratings reveal. In Switzerland, the average across all industries is 77%. Above all, it is energy and water providers, but also tradesmen, who find favor with consumers in Switzerland. However, other industries enjoy a largely positive reputation among Swiss respondents. All economic sectors recorded trust levels of over 50%.

Italy: crisis of confidence in the financial sector

With an average rating of 53%, Italians are more reserved in their trust of the economy. Trades come out best, with 75%. Manufacturers of consumer electronics and household appliances are in second place, although at 63%, this sector doesn’t perform as well as in many other countries. A discernible level of skepticism is evident among Italians with regard to car manufacturers, energy and water suppliers and the pharmaceutical industry. It is possible that Italians’ loss of trust in politics, following various corruption scandals and affairs, has now permeated the economy. In any case, most industries are in the midfield range with values of around 50% to 60%. Italian banks and insurance companies can only dream of such values, with not even a quarter of Italian respondents expressing their trust in these institutions. As a comparison, 62% of Swedes consider their financial sector to be trustworthy.

Russia: household appliances and consumer electronics score well

Russian respondents were similarly reticent in expressing trust in their economy, with none of the surveyed economic areas achieving a value over 65%: the average overall rating is 53%, the same as in Italy. By comparison, Russians were primarily less trusting of banks, retail, drug manufacturers and airlines. Considering the airline disasters which seem to happen with horrifying frequency in Russia, trust for this industry among Russian respondents was less than 50%. Russians were even skeptical toward trades which are so beloved everywhere else. While this industry did achieve second place in the rankings for Russians, at 60%, agreement was below-average in comparison with other countries. Russians place their trust in manufacturers of (primarily imported) consumer electronics and household appliances. More than two in three respondents expressed their trust in this industry.

High values in the USA, lack of trust in Brazil

Manufacturers of microwaves, TVs and laptops have earned great trust in the eyes of American consumers. A total of 79% of consumers in the U.S. trust this industry. At 81%, only trades perform better. Energy and water providers make up the rest of the top three, enjoying the trust of a good three quarters of the American population. This is perhaps down to the fact that they are so rarely implicated in scandals, which is certainly not the case with the pharmaceutical industry, for example. At 58%, this industry is bottom of the rankings for trustworthy industries in the USA. However, overall, trust values are comparatively high in the USA: the average rating for all sectors is 69%. The opposite is true in Brazil, which recorded an average rating of 55%, nearly as low as Italy. Brazilians have most trust in manufacturers of consumer electronics and household appliances as well as energy providers. At just 30%, trust is lowest in telecommunications and internet service providers.

Trust is therefore ever-changing dependent on many factors such as national corruption as well as societal and political relationships. Disasters such as plane crashes, conflicts between countries and scandals which break-out into the public domain may undermine feelings of security. Even when the economy is not always an influence, companies should treat the trust of their customers as an important commodity. Those aware of how sensitively consumers react and those who manage to retain trust will eke out a competitive advantage by having satisfied and loyal customers. Bismarck himself famously said: “Trust is a delicate plant; once destroyed, it doesn't grow back quickly”.

A comprehensive report with the findings from all 26 countries and time comparisons will be sent in an exclusive newsletter to all members of the GfK Verein.

Data source: Global Trust Report 2015 undertaken by the GfK Verein

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