Economy in crisis: employers demand quick reforms!

Economy in crisis: employers demand quick reforms!

On June 6, 2025, the AGV general meeting took place in the Lüdenscheider Phenomenta, where around 100 company representatives and guests came together. The focus of the event was a lecture by Prof. Dr. Lars Feld, who spoke on the topic of “German and European economic policy in a new world order”. Feld highlighted the current economic challenges facing Germany, describing the current situation as “Cold War 2.0” due to geopolitical shifts.

Andreas Kostal, deputy AGV chairman, expressed the urgent call to strengthen Germany's competitiveness. In this context, Feld pointed out that Europe is caught between the superpower blocs and that relations with the USA are strained. Another worrying sign is the Russian war of aggression against Ukraine, which has increased insecurity in Germany.

Structural crisis and economic trends

Germany sees itself in a deep structural crisis, characterized by inadequate infrastructure and high tax burdens. In comparison to the USA and Switzerland, the need for action becomes clear. While there are hopes for an economic turnaround as a result of the change in government, the measures mentioned in the coalition agreement are only “a few small rays of hope”.

Criticism of the current subsidy policy is inevitable because it cannot increase long-term growth opportunities. Fears about the noticeable impact of economic stagnation on the labor market are already a reality, while an increase in unemployment is observed. Dr. Ralf Geruschkat, managing director of the SIHK, calls for deregulation in various areas such as data protection, labor law and environmental and construction law.

Globalization and its effects

With regard to globalization, an analysis of developments found that it leads to more competition, but this can also lead to the closure of companies, relocations and job losses. Sectors particularly at risk within the EU are the textile and clothing industry, the shoe and leather goods industry, and metal production and processing. Job losses often involve low-skill positions, adding to the challenge for many workers.

A significant problem is offshoring, where manufacturing companies are at risk due to competition from low-wage countries. The COVID-19 pandemic has made the urgency of relocating critical and system-relevant products such as pharmaceuticals back to Europe even clearer. There is also a trend that offshoring is increasingly being relocated from Western member states to Eastern European countries, while target countries are partly in North Africa and Asia.

The results of the liberalization of international trade are overall positive; Nevertheless, certain sectors are severely affected. However, the adjustment period for employees can reduce the benefits of liberalization and lead to additional strain on the labor market. In such uncertain economic times, the call for a return to the social market economy and an awareness of the problems among the population is becoming ever louder.

The employers' day also began with workshops offered to trainees from AGV member companies in order to promote interest and commitment to the future economy at an early stage.

For more information on this topic, you can read the posts by Localdirect and European Parliament see.