The German economy faces a prolonged structural crisis, according to a stark warning issued by Peter Adrian, President of the Association of German Chambers of Industry and Commerce (DIHK). In an interview with the “Rheinische Post”, Adrian expressed deep concern over the nation’s economic performance, stating that Germany has failed to achieve meaningful growth since the COVID-19 pandemic.
The DIHK’s projections for 2024 currently estimate a minimal growth rate of 0.7 percent. However, Adrian cautioned that this figure is artificially inflated by the reduced number of public holidays and the government’s infrastructure investment fund. Stripping away these factors, growth would likely stagnate at a mere 0.3 percent, reinforcing a concerning trend of economic inertia.
Adrian’s critique primarily targeted the current federal government, accusing it of insufficient action and a lack of decisive reform to address the challenges facing German businesses. While acknowledging some positive initiatives, he argued that the government’s efforts have fallen significantly short of what is needed to create a genuinely supportive environment for growth. He specifically cited burdensome bureaucracy and rising operational costs as major impediments.
A particularly contentious point raised by Adrian was the recent pension reform package, which he believes will exacerbate existing burdens on employers through increased payroll taxes and social security contributions. He reported that over half of businesses surveyed now identify rising labor costs as a primary business risk.
To remedy the situation, Adrian is advocating for broad-ranging social reforms designed to curb ancillary labor costs to a target level of 40 percent of gross salaries. He proposed linking the retirement age to life expectancy as a necessary step, reflecting a broader push for labour market flexibility. The DIHK’s stance signals a growing pressure on the German government to adopt bolder economic policies, particularly concerning social security and labour regulations, to avoid the risk of prolonged stagnation and a potential decline in Germany’s economic competitiveness.
