Excessive bureaucracy and rising costs are critical issues for businesses in Germany, highlighted during ‘Economic Warning Day.’ Jens Ohlbrecht of ‘Ohlro Hartschaum’ faces hiring challenges due to uncertain market conditions, emphasizing the importance of the middle class for economic stability. Industry leaders advocate for reforms, including tax reductions, to alleviate financial strain. Despite slight improvements in business sentiment, significant concerns persist, with projections for growth being drastically lowered, underscoring the urgent need for political action and public awareness.
Highlighting the Bureaucratic Burden on Businesses
Excessive bureaucracy and soaring costs are in the spotlight today as we observe ‘Economic Warning Day.’ This initiative aims to shed light on the challenges that businesses face daily, exemplified by two compelling stories from the industry.
Jens Ohlbrecht, managing director of the Berlin-based company ‘Ohlro Hartschaum,’ has been seeking to hire new employees for the past six months but has yet to post the job openings. He expresses frustration, stating, “They have been hesitating for far too long.” His hesitation stems from uncertainty about future market conditions, which leaves many business owners questioning what lies ahead.
The Backbone of the German Economy
‘Ohlro Hartschaum’ specializes in manufacturing Styrofoam containers designed to keep food and medical products cold and secure during transport. With a workforce of 17, this family business represents the classic middle class in Germany, which comprises over 99% of the country’s enterprises. According to Ohlbrecht, this middle class is crucial for job creation and vocational training. He emphasizes that without it, the German economy could grind to a halt.
As the annual economic report approaches, various industry associations are advocating for a significant political shift. Ohlbrecht feels overlooked by politicians and society, pointing to the lack of campaign promises focused on supporting the economy. In support of the ‘Economic Warning Day,’ he joins over 100 associations and companies to highlight what they see as a ‘dramatic situation’ for Germany’s economy.
During a tour of his production facility in Strausberg, Brandenburg, Ohlbrecht observes his employees working diligently. The production process for Styrofoam is energy-intensive, requiring the expansion of plastic granules in a steam oven, which he refers to as a ‘popcorn machine.’ Ohlbrecht notes that energy costs now account for approximately 20% of production expenses, with electricity prices having surged by 200% and gas prices by 50% over the past four years.
He worries about remaining competitive, especially with the Polish border just 40 kilometers away, where energy and labor costs are markedly lower. The recent increase in health and long-term care insurance contributions has only exacerbated this financial strain.
Leibinger, the new president of a trade association, identifies these challenges as ‘home-made problems’ and calls for immediate reforms to alleviate the burden on businesses.
Despite being the world’s third-largest economy, Germany is grappling with significant uncertainties. A recent survey by the Munich ifo Institute, which polled around 9,000 executives, reveals a slight improvement in business sentiment, but it remains at a low level. “The German economy is not getting off the ground,” states ifo survey chief Klaus Wohlrabe, emphasizing that nearly all sectors are experiencing stagnation without any clear signs of recovery.
Supporters of ‘Economic Warning Day’ are pressing for relief and stability in the economy. Organizers include prominent associations such as the Foreign Trade Association BGA and the General Association of the Textile and Fashion Industry. They have put forth ten political proposals, including tax reductions to align with the EU average and a reestablishment of the 40% cap on social contributions.
As the new government prepares to take office, the future of the German economy hinges on addressing these pressing issues. Dirk Jandura, president of the Foreign Trade Association, expresses his frustration, stating, “It often feels like politics is constantly putting sticks in our wheels.” He advocates for reducing bureaucratic hurdles, believing that doing so could unleash significant energy and efficiency at minimal costs.
Jandura, who leads ‘Obeta,’ an electrical wholesale company with just over 1,000 employees, highlights the archaic processes still present in his business. He points to a storage area filled with moving boxes containing invoices and delivery notes, all of which exist digitally. “This represents outdated regulations that have no place in today’s world,” he remarks.
The mood among businesses in Germany has improved slightly, but the call for action is more urgent than ever. Federal Minister of Economics Robert Habeck (Greens) is set to unveil the government’s annual economic report, which, according to sources, is expected to significantly lower growth forecasts for the year from 1.1% to a mere 0.3%.
For Ohlbrecht, the success of Economic Warning Day hinges on raising public awareness about the gravity of the economic issues at hand. “If at least the general population understands the magnitude of the problems facing our economy, that would be a victory for us,” he concludes.