East Germany's economy: Less bureaucracy, more opportunities for companies!

East Germany's economy: Less bureaucracy, more opportunities for companies!

The economic situation in East Germany remains a central topic in the current discussion about the future of the region. A new inventory from the Ifo Institute and the Central German Foundation shows that the East German economy has generally grown faster than the West German one in recent years. The gross domestic product per hour of employment in East Germany now reaches 86 percent of the West German average, which represents a significant increase compared to less than 50 percent at the time of reunification. Nevertheless, there are significant challenges that need to be overcome in order to ensure this positive development in the long term, such as: faz.net reported.

At the East German Economic Forum in Bad Saarow, around 500 entrepreneurs and managers discussed the current situation. The general mood among business representatives is worse than the actual situation: many recognize that the individual company situation is not negative, but have concerns about general economic developments. The central themes are the expansion of renewable energies, microelectronics and tourism, but high energy prices, a shortage of skilled workers and political radicalization stand in the way of progress.

Challenges of East German companies

Entrepreneurs like Eckhard Schmidt, who runs a screw factory in Zerbst, illustrate the challenges facing the industry. With 300 employees, the factory produces fasteners for wind turbines and railway sleepers, with 40 percent of the products being exported. The annual turnover is 100 million euros. Schmidt emphasizes that bureaucracy is the biggest competitive disadvantage: five employees are only busy with reports and minutes, which causes additional annual costs of an estimated 750,000 euros. A survey of 1,500 East German companies shows that 70 percent of them see reducing bureaucracy as the most important political task, reports zdf.de.

High energy costs are also putting a strain on the industry, especially since the Russian gas supply was stopped. The Piesteritz nitrogen plant in Wittenberg is one of the largest natural gas consumers in Germany and is faced with costs of over 40 million euros annually due to the gas storage levy. SKW managing director Carsten Franzke is calling on the new federal government to lower energy prices and tariffs on imported fertilizer.

Acute skills shortage and solutions

Professor Andreas Knabe from the Otto von Guericke University highlights the burden of bureaucracy and the challenges of the shortage of skilled workers. The corporate structure in the East is more fragmented and the working population is aging more quickly. Over half of East German companies have difficulties finding and retaining employees. There is an urgent need for better training for young people and for qualified immigration.

The political landscape also requires action. Companies in the East are dissatisfied with politicians, whose promises are often not implemented. The new federal government now has 100 days to initiate concrete changes, while elections in Mecklenburg-Western Pomerania and Saxony-Anhalt are due next year. Another item on the companies' wish list is reducing bureaucracy and lower taxes in order to create an attractive climate for investments.

Overall, East Germany remains a place with great potential, but there are some significant hurdles standing in the way of progress that need to be overcome quickly and effectively.