Policymakers need to end their narrow fixation with GDP and growth. Germany is the latest country to embrace new ways of measuring and improving economic and social wellbeing 

In May 2013, the German Parliament will vote on a report drafted by a parliamentary inquiry committee entitled 'Growth, wellbeing and quality of life'.

Following the Sarkozy expert commission headed by Joseph Stiglitz in 2009, the policy initiative by Britain's David Cameron to measure happiness, and the OECD's Better Life Index, the German report represents another initiative geared towards redefining the relationship between economic growth and wellbeing.

All these initiatives assume that the fixation of policymakers with GDP and growth could and should be overcome by highlighting other aspects that make the lives of millions of citizens happier, as well as making their lifestyles more sustainable. At the same time, they all face the reality that the financial crisis has left governments with only one route out of indebtedness: to focus on economic growth.

A parliamentary inquiry committee is a standard tool in the German policy process to address long-term policy issues. Made up of equal shares of members of parliament and experts, seats in the committee are distributed according to the strength of the parties in parliament. The committee members draft a report based on scientific evidence. I had the privilege to be nominated by the German Social Democrats to join the expert side over the last six months.

On key questions, the report contains substantively different assessments both on the challenges and the solutions to future economic development. In particular the committee was split over the question of whether low levels of economic growth are a blessing, a curse or simply a fact.

Some of the committee embraced the coming policy agenda on sustainability through the framework of business as usual, whilst some anticipated the necessity and reality of fundamental transformations in our market economies. Despite these differences, there are some laudable aspects in the committee’s work that should be acknowledged.

First, the measurement of well-being. Rather than focusing on individual wellbeing, the committee proposed 10 indicators that jointly reflect the wellbeing of a nation and its effects on the globe. Indicators include economic growth, inequality, employment levels, education, indebtedness, greenhouse gas emissions, nitrogen and bio-diversity.

Annual changes in these measures indicate development for the better or worse. Even though the combination of these 10 indicators does not follow a strict formula and could be complemented by a number of others, they cover basic economic, social and environmental aspects of key sustainability concerns.

Second, rising inequality is now seen as a prime policy concern in Germany across all parties. The level of income inequality is taken as a key economic indicator next to economic growth. The importance of containing further trends of inequality in income and wealth and developing better statistics for analysing wealth inequality was shared by the committee as a whole.

Third, a new system of well-being 'warning lights'. Well-being indicators are accompanied by warning lights, in particular for the development of wealth inequality. While income inequality will be measured and published alongside other indicators on an annual basis, the development of wealth inequality will be displayed as a warning signal, which lights up if wealth inequality worsens.

In Germany, the top 10 per cent of the population own about 60 per cent of net wealth. Regular reporting on wealth inequality presupposes better research and up-to-date data on the distribution of wealth. If taken seriously, policy measures to combat wealth and income inequality would shape government action considerably. No party in parliament objected to this.

More warning lamps are also proposed to light up other areas. These include speculative bubbles in credit markets, stock-prices and real estate; indebtedness of private households; life-expectancy; and the use of nitrogen and bio-diversity. In the view of the commission, running the country resembles the cockpit of a car: warning lights will indicate that action is needed.

Indicators and warning lights will be published in an annual report to the government which has to respond to its findings in parliament. A physical display of indicators and warning lights will be installed in or around parliament.

Fourth, regulating financial markets is a key prerequisite for future economic sustainability. Regulating financial markets was a central concern of the committee for heading towards sustainable rather than bubble-driven growth. Consumer policies, lifestyle and work, and the importance of public infrastructure for sustainable consumption were also highlighted. Sustainable work includes lowering stress-levels at work as well as gender balanced working hours.

Finally, squaring low-growth, inequality and sustainability. As party systems continue to disintegrate and coalition governments are the norm across Europe, preparing a policy consensus based on long-term challenges across party boundaries is significant for policy agreements. Germany is heading towards a federal election in September 2013. Intense cross-party discussions and negotiations help frame long-term policy debates.

Based on the discussions in the committee, a clear majority of parliamentarians see the future of Germany as a process that involves squaring the effects of low growth with redressing inequality and greenhouse gas emissions, through a mixture of technological progress and lifestyle changes.

Anke Hassel is professor of public policy at the Hertie School of Governance in Berlin, Germany. A fuller version of this post first appeared on the Policy Network website