For years one crisis followed another. The hoped-for recovery did not materialize even in 2024. More and more medium-sized companies are feeling this.
Frankfurt/Berlin.
Economic weakness, slowdown in orders, shortage of qualified labor: concerns are growing among medium-sized German companies.In the latest survey conducted by the Federal Association of German Cooperative and Raiffeisen banks (BVR) and DZ Bank, many companies rate their current situation as worse than in the spring.
the expectations of more than 1,000 companies for the next six months have also worsened in almost all sectors, according to the analysis, pessimism has returned to prevail: more than a quarter (27%) of those interviewed between September 11 and 10 October 2024; The owner and CEO now expects the business situation to worsen. Only one in five companies (20%) expect an improvement. In the spring survey the relationship was reversed.
Reluctance to invest
Because production capacities are not being used to their full potential, many companies are holding back investments – and have been doing so for two years already. Furthermore, according to the survey, medium-sized companies woudl prefer to reduce staff rather than increase them in the next six months. This is especially observed in medium-sizedcompanies in Eastern Germany and in medium-sized and large companies wiht more than 200 employees.
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Medium-sized companies complain about bureaucracy (archive image) Image: Monika Skolimowska/zb/dpa
Bureaucracy as a major burden
In addition to the crises of recent years, medium-sized companies have been complaining for some time about excessive bureaucracy and the lack of qualified manpower. In the survey, 82 percent of those interviewed indicated excessive bureaucracy as the most serious problem by far.
“Bureaucracy and a shortage of skilled labor remain the biggest problems facing medium-sized businesses. Politicians are called upon to create complete solutions as quickly as possible after the federal elections so that the economy can get back on its feet,” the president warned by BVR Marija Kolak.
The exodus of baby boomers
In their analysis, the cooperative banks point out that in the next ten years the shortage of skilled labor will become increasingly serious because more and more baby boomers - the so-called baby boomers – will reach retirement age in the coming years.
The companies interviewed see the possibility of hiring their employees beyond retirement age as the most critically important tool to combat demographic change: almost three quarters (72%) would like to make this possible for their employees.
Capital buffers provide hope
#Persistent #economic #weakness #dampening #sentiment #among #midsized #businesses
How can medium-sized businesses improve resilience in an uncertain economic climate?
Title: navigating Uncertainty: An Interview with Economic Expert Dr. Anna Müller
Editor of Time.news (ET): Welcome,Dr. Müller. Thank you for joining us today to discuss the pressing issues faced by medium-sized companies in Germany. according to recent surveys, these businesses are increasingly pessimistic about their future. What do you attribute this growing concern to?
Dr. Anna Müller (AM): Thank you for having me. The current economic landscape is indeed troubling for many medium-sized companies in Germany. Several factors are at play here, including economic weakness, a slowdown in orders, and a persistent shortage of qualified labor. Together, these elements create a perfect storm of uncertainty, making it challenging for companies to maintain their previous levels of optimism.
ET: Absolutely. The survey you mentioned indicates that 27% of businesses surveyed expect the situation to worsen. This seems to contrast sharply with earlier reports from the spring. What do you think has changed so dramatically in just a few months?
AM: The shift in expectations can largely be attributed to the ongoing economic challenges. Initially, there was some hope for recovery as markets began to stabilize post-pandemic, but that optimism has been dampened. The combination of reduced consumer demand and increasing operational costs has made it difficult for companies to feel confident about the future. The reluctance to invest further exacerbates this issue, as companies wait to see how the market evolves.
ET: Speaking of reluctance to invest, what are the main reasons companies are hesitant to commit financially at this time?
AM: Companies are grappling with a high level of uncertainty, and when the future looks grim, investing becomes a risky endeavor. Many firms are experiencing low production capacities, which discourages expansion.Additionally, the labor market remains tight, with skilled workers in high demand; this directly impacts operational capabilities and future growth potential. Without a stable workforce, directors are understandably cautious about making notable financial commitments.
ET: That paints a clear picture of the challenges they face. Given these circumstances, what strategies should medium-sized companies consider to navigate this difficult period?
AM: First and foremost, these companies need to focus on resilience. This means improving operational efficiencies and possibly diversifying their offerings to adapt to changing market demands. building strong relationships with existing customers can also help stabilize revenue during uncertain times. Furthermore, investing in employee training and development can mitigate the issue of skilled labor shortages by upskilling existing employees.
ET: those sound like practical and proactive approaches.Looking ahead, what do you foresee for the medium-sized sector in Germany? Can we expect a turnaround anytime soon?
AM: Predicting the economy is always complex, especially in our current global context. However, if businesses can adapt to the challenges and find innovative solutions, there is potential for recovery in the long run. It may take more time than many hope, but persistence combined with strategic planning will be key to overcoming these obstacles.
ET: thank you, dr. Müller, for your insights.It sounds like the road ahead will be challenging, but with the right strategies, medium-sized companies can navigate these turbulent waters. We appreciate your time and knowledge on this critical topic.
AM: Thank you for the opportunity to discuss these significant issues. I truly hope that our medium-sized businesses can find the strength to adapt and thrive in the coming months.