Medium-sized businesses in Germany have more employees than ever before – but recently the creation of new jobs has slowed down. Small and medium-sized companies in this country will have a good 33 million employees in 2024, according to an analysis by the state development bank KfW. Around 207,000 employed people were added within a year. In the previous year, however, almost half a million new jobs were created in medium-sized businesses.
“Medium-sized companies demonstrate a high level of resilience even in difficult economic times. However, that does not mean that they are really doing well,” says KfW chief economist Dirk Schumacher, summarizing the results of the latest “KfW SME Panel”. “Companies are suffering from rising costs, which puts high pressure on returns. In addition, companies are less willing to invest.”
Investment remains near all-time lows
Only 39 percent or 1.51 million of medium-sized companies have implemented investment projects. That’s the same number as a year before, a value close to the all-time low. In total, small and medium-sized companies in this country invested a nominal amount of around 221 billion euros in new systems and buildings in 2024, just 2 billion euros more than a year earlier. Adjusted for price increases (real), the new investment volume was once again in the red, according to KfW calculations.
Bureaucracy eats up working time
The biggest obstacles to investment: high prices for energy, materials and wages, the general economic downturn and the uncertainties of the US government’s trade policy. In addition, there is one of the most pressing economic policy issues from the perspective of medium-sized businesses: reducing bureaucracy. On average, around seven percent of employees’ working hours, or 32 hours per month, are spent on bureaucratic processes.
KfW chief economist Schumacher appeals to politicians: “It is essential for Germany as a business location that medium-sized businesses regain strength.”