Employment record in the German SME sector - but bureaucracy is braking - German SMEs Face Bureaucratic Hurdles and Rising Costs in 2024
SMEs in Germany faced challenges in 2024, with real investment declining and job creation slowing. Despite employing over 33 million people, these businesses grappled with bureaucratic hurdles and rising costs. The government plans reforms to ease the burden.
In 2024, real investment by SMEs decreased after adjusting for inflation. Only 39% of SMEs undertook investment projects, totaling €221 billion. This dip follows a year when SMEs added nearly 500,000 jobs, but in 2024, this number dropped to approximately 207,000.
Bureaucracy weighed heavily on SMEs, consuming an average of 7% of employees' working time, equivalent to 32 hours per month. To tackle this, the German government plans three reform packages by 2028. These include abolishing the obligation for SMEs with fewer than 50 employees to appoint safety officers, modernising form requirements with digital solutions, and replacing written forms with electronic ones. These measures aim to save businesses around €200 million annually, with the abolition of safety officer positions alone potentially saving €135 million.
SMEs also faced significant barriers to investment, including high energy, material, and wage costs, sluggish economic growth, and uncertainties in U.S. trade policy.
The German government's planned reforms aim to reduce bureaucracy and ease the burden on SMEs, which employ over 33 million people. Despite these challenges, SMEs remain a crucial part of the German economy, contributing to job creation and growth.
