Katja Lilu Melder, Managing Director and Construction Manager of BMG Santec GmbH, presented an exoskeleton to Chancellor Olaf Scholz and ZDH President Jörg Dittrich (right) at the Zukunft Handwerk conference. (Photo: © DHB / Kirsten Freund)
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March 1, 2024
The mood in companies is poor, bureaucratic burdens are overwhelming: At the top-level business meeting with Chancellor Olaf Scholz, the associations presented a ten-point paper to strengthen Germany as a business location.
"The mood in businesses is poor," said Jörg Dittrich, President of the German Confederation of Skilled Crafts, at the high-level meeting between German industry and Chancellor Olaf Scholz in Munich during the "Future of Skilled Crafts" congress . He added that it was now time to create a positive atmosphere and pull Germany out of its slump. "Above all, Germany needs courage and speed in reducing bureaucracy ."
The German economy is facing major structural challenges, said BDI President Siegfried Russwurm . It's not just the Russian war of aggression against Ukraine or "geopolitical upheavals" that are weighing on the economy. There are also "many homegrown problems," Russwurm added. He cited the comparatively high taxes and high energy costs as examples.
Uncertainty is widespread, and this is "poison for investment ." The associations are hoping for approval of the Growth Opportunities Act in the Bundesrat (Federal Council) on March 22nd. They are also demanding, among other things, the abolition of the solidarity surcharge , a design of the retained earnings reserve that is more suitable for small and medium-sized enterprises (SMEs ), and a reduction of the electricity tax to the European minimum.
The "rampant" bureaucracy with its many documentation requirements was also a central topic of the high-level discussion, as well as at the FUTURE OF CRAFTS congress held parallel to the International Crafts Fair in Munich.
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The Federation of German Industries (BDI), the Confederation of German Employers' Associations (BDA), the Association of German Chambers of Industry and Commerce (DIHK), and the German Confederation of Skilled Crafts (ZDH) presented the Chancellor with a ten-point plan . Given the multitude of topics, he announced that he would dedicate even more time to dialogue with industry next year and praised the innovative strength of the skilled trades , which he had witnessed during his tour of the trade fair.
German Chancellor Olaf Scholz visited three exhibitors at the ZUKUNFT HANDWERK Congress 2024. Here, at the booth of Solte Q, a company that offers solar roof tiles. Photo: © GHMChancellor Olaf Scholz He emphasized the constructive exchange with the business community and announced that he would devote even more time to this in the coming year. Scholz expressed confidence that the Growth Opportunities Act, which promotes investment, will be passed in the Bundesrat.
The biggest obstacle to growth in Germany, both now and in the coming decades, is the labor shortage and the question of "how do we get enough people who are willing to work and contribute?" The prerequisites for addressing this have been created with the continuing education and training strategy.
The most important thing, however, is to recognize that the foundation of economic prosperity also lies in the fact that workers from Europe and around the world contribute to it in Germany. The Skilled Immigration Act has created the necessary conditions for this.
Scholz appealed to business associations to spread more confidence . "Otherwise, people will keep their money in savings accounts and not invest." Of course, nothing should be sugarcoated, but confidence is needed for investment and consumption. At the same time, the Chancellor announced that the reduction of bureaucracy should now proceed rapidly. However, business associations criticized him for not addressing the ten-point plan in any further detail.
The German economy needs internationally competitive electricity prices. The federal government's agreement on a power plant strategy should now be followed very quickly by concrete tenders, which also require clarity on the locations. Rapidly rising grid fees must continue to be limited by a government subsidy to stabilize the price level. For the national hydrogen ramp-up to be successful, the financing model for the core grid must be capital market-compatible and legally anchored.
Growth, innovation, and the pace of change in Germany are hampered by excessively long planning and approval processes . The legislative amendments agreed upon in the Pact for Accelerating Planning, Approval, and Implementation must be consistently implemented. To achieve greater speed, all measures must be implemented without restrictions in all relevant laws. However, this must not lead to any restrictions on public procurement law.
Germany is burdened by excessive complexity and a plethora of bureaucratic regulations. The Fourth Bureaucracy Relief Act (BEG IV) can be a first step toward achieving noticeable relief. However, the current draft of BEG IV requires extensive revisions. The business community has submitted numerous proposals that have not yet been considered. Existing burdens—particularly regarding reporting and documentation requirements—must be identified and reduced through practical assessments, new bureaucracy must be systematically avoided, and administrative modernization and digitalization must be accelerated. Furthermore, labor law must be modernized, and interventions in collective bargaining agreements must be avoided.
Large parts of the infrastructure have significant deficiencies. This is particularly true for transport routes and the energy and charging infrastructure . We need both renovation and expansion. Faster procedures, standardized permits, and the elimination of extensive new permits for renovations are crucial to ensuring the functionality of the infrastructure, especially in the transport sector, in the coming years. A reprioritization of public budgets requires reliable and consistent investment in infrastructure. The potential of rural areas for growth and sustainable transformation must be unlocked.
Germany's competitiveness must be strengthened through fundamental tax reform . This includes the introduction of a permanent investment premium, improved depreciation allowances, and the expansion of tax incentives for research and development to an internationally standard level. The goal must be to reduce the tax burden on companies in Germany to a maximum of 25% . To achieve this, the solidarity surcharge must be completely abolished from the companies' perspective, and the retained earnings reserve must be structured in a way that is suitable for small and medium-sized enterprises (SMEs). The reduction of electricity and energy taxes to the European minimum must be implemented for all companies and businesses.
Securing a skilled workforce is a crucial factor in ensuring Germany's economic competitiveness. All possible avenues must be explored. This includes both effective labor migration and activating all domestic potential. For example, we need significantly simpler and more attractive contribution regulations for employing pensioners . More young people must be recruited for dual vocational training . With regard to labor migration, we must finally succeed in improving, accelerating, and digitizing the processes and procedures.
At the beginning of 2023 , social security contributions exceeded 40% for the first time in ten years . We urgently need sustainable and cost-reducing structural reforms in all branches of social security, but especially in health and long-term care insurance. Furthermore, we need reports and projections for the future of the individual branches of social security and for total social security contributions. This will increase transparency, highlight the need for reform, and facilitate long-term decision-making.
According to the coalition agreement, a minimum pension level of 48% is to be guaranteed beyond 2025. However, permanently fixing this at a minimum of 48% would further exacerbate the long-term financing problems of the pension insurance system. This is because significantly rising pension contributions are already looming due to demographic change. The pension insurance system must not be burdened with additional expensive benefit promises; instead, measures must be taken to reduce the pressure on contribution rates.
The implementation of the Supply Chain Due Diligence Act (LkSG) has created extensive and disproportionately bureaucratic requirements, particularly for small and medium-sized enterprises (SMEs). This necessitates costly external consulting and hinders companies' diversification and implementation efforts. The LkSG implementation requirements should therefore be designed to be as bureaucratic and practical as possible , and consistent with EU initiatives such as the Sustainability Reporting Directive. The impact on SMEs must also be given greater consideration. The Act, its implementation requirements, and the European equivalent, CSDDD, should all be fundamentally reconsidered.
The EU is challenged to increase its attractiveness as a partner in trade cooperation vis-à-vis global competition. A strategically driven trade policy is essential to achieve the urgently needed diversification of sales and procurement markets. The German government should avoid overburdening potential agreements and advocate for greater flexibility in negotiations in order to conclude important agreements such as those with Mercosur, Australia, India, and Indonesia.
Source: ZDH
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