Economic crisis: Hidden causes threaten Germany's future!

High energy costs are often cited as the main cause of the current crisis in the German economy. However, a current analysis of the 100 largest German listed companies shows that other factors play a much more serious role. According to the study by strategy consultancy Advyce & Company in collaboration with the German Protection Association for Securities Holdings (DSW), the German economy may be on track to contract for the third year in a row in 2023, something that has not happened since World War II.

The study shows that energy costs only account for 4% of the total load. In contrast, the shortage of skilled workers and international competition represent more significant challenges at 20% and 21% respectively. The pressure on the automotive industry is particularly high, while regulation accounts for 24%, making it the second highest stress factor. Labor and structural costs turn out to be the most serious factor, 20% higher than the European average.

Increased wage and structural costs

High wage and ancillary wage costs coupled with low productivity and inefficient organizational structures drive up structural costs. The study shows that compared to other countries, German companies make relatively low investments in the area of ​​research and development. The mechanical and plant engineering industry is particularly affected by these challenges, followed by the chemical industry and energy suppliers.

A cultural change in German companies is seen as necessary in order to become more innovative and competitive. There are also demands that politicians reduce non-wage labor costs, reform social insurance and provide investment subsidies. Marc Tüngler from the DSW sees the future federal government as having a duty to provide appropriate impetus to help the German nuclear industry regain its strength.

Outdated structures, bloated administrations and weak innovative capacity were identified in the analysis as other main causes of the crisis. Over the last two decades, many companies have missed important changes and are struggling with inefficient, barely digitized processes. The influence of international competitors, especially from China, is particularly affecting the automotive industry, while the shortage of skilled workers, particularly among engineers and IT specialists, continues to be noticeable.

Overall, the analysis shows that although the increased energy costs affect some industries, they are less relevant for many industries compared to other cost sources such as wage and structural costs. Nevertheless, Germany still has the potential to compete internationally again through well-trained skilled workers and highly specialized companies. Politics should actively support industries in their transformation and, last but not least, reduce energy costs in order to strengthen competitiveness.