The effects of the COVID19 pandemic were that the bankruptcies law was temporarily changed, which had the effect that companies that were already on a way to bankruptcy could live longer. That is also the reason why in 2020 the numbers were at a low point for almost 20 years. Then in 2021 the numbers soared. So the the 2024 prediction will be still lower than the 2021 numbers.
The long term view can be seen here: https://de.statista.com/statistik/daten/studie/4898/umfrage/...
Even worse if they spin a complicated narrative based on this single data point that isn't supported by the broader context.
It's a mix of reasons 1) Covid grants that delayed bankruptcies, 2) Increase of VAT back to 19% for hospitality industries, 3) Increase in construction costs for construction companies, 4) inflation, 5) disruption in trade
And this is not just traditional industries, even 1 in 10 startups risk bankruptcy. [1]
[0] https://www.tagesschau.de/wirtschaft/konjunktur/studie-insol...
[1] https://www.tagesschau.de/wirtschaft/unternehmen/insolvenzen...
That seems incredibly low though, even 10 years ago (and not specific to Germany) only 1 in 10 startups succeeded. [0]
[0] https://www.forbes.com/sites/neilpatel/2015/01/16/90-of-star...
"They are also 11.2% more than in the first quarter of 2020 when 4,683 corporate insolvencies were filed before the COVID-19 pandemic had its full impact. The coronavirus pandemic period itself saw special, temporary regulations introduced and low insolvency rates."
Your own statista link shows that the number of bankruptcies was steadily decreasing between 2010-2019, now it's going up again.
So finally it is some kind of a cleanup. But it doesn't mean that the bankruptcy numbers soar.
Try to take a look into the startup arena. Does the number of bankruptcies in startups soar, because the time of cheap money is over? Or is it more that the numbers are coming back into a normal level and in the last years of cheap money, it was too easy to keep companies afloat, which never really had a sustainable business model.
1) Mindset and Culture. The idea of entrepreneurship, hard work and reward for risk is becoming completely alien to Germans. New technologies and high growth sectors are almost exclusively perceived in terms of their risks and downsides. Security, reliance on the government for problem solving and tall poppy syndrome are paramount.
2) Overly complex civic systems. Germans always were famous for their bureaucracy. But government interference in the most minute details of running a business, endless red tape and micro regulations have made it largely impossible to be competitive on the international stage.
3) Poor Work Ethic. What? The Germans? Aren’t they known to be the hard working ones? Well - somehow, our trains are also known to be the punctual ones. These cliches might have been true during the “Wirtschaftswunder” - but today, Germans work the fewest hours of any OECD country.
4) Climate Focus. Germany’s government is focused on a largely ideologically driven understanding of climate change prevention. It’s not just that Russian gas is no longer available - in addition all nuclear power plants were shut off. Climate regulation and taxation also adds to rising energy prices and production costs.
5) Worker Rights: Germany has very high levels of worker protections, making it hard to scale workforces up and down and near impossible to dismiss employees for performance reasons.
6) High Taxes. Germany has some of the highest corporation and personal income taxes in the developed world. And while e.g. Scandinavian countries have even higher taxes, in Germany it doesn’t feel like you’re getting something of equal value back from the state. This is of course highly subjective.
7) Few Future Industries. Germany’s industry has focused on gas powered mobility and advanced machine building - and has become a world leader in many of these areas. It has, however, very few software, AI, or other companies that make up the bulk of e.g. the US economic growth.
There’s probably many more - but this might paint a picture from the inside.
Let’s say a company has revenue X and is valued as NX on the stock market. Let’s say they will be increasing prices to maintain profits in the next several years and will reach X+Y just because of that. If nothing else changes fundamentally, they should be valued at N(X+Y) at some point.
The good thing is that those leavers create opportunities for others, because Germany is still a rich country with a lot of consumer demand,
German's pay a lot of taxes. Living costs and rent are sky high in cities. In the past, I reduced my hours to 28 hours a week because the difference was negligible in taxes paid. I even got money from the government to pay rent because my wage was lower.
There is a real problem where between salary band's, the money after taxes does not change significantly even if you're paid more. Working half a day only is incredibly popular for these reasons (among others). It's gone so far that politicans from all sides are publicly thinking about erasing the possibility for halftime work.
I met many engineers who would be completely willing to work more hours, but it makes very little sense as you are working the additional hours for far lower wages.
The idea of banning lower work times is new to me, but seems in line with the German government approach to invent an anti-solution to the problem with severe potential downsides (e.g. for parents).
The shutdown of the nuclear reactors was an ideologically driven decision by the last government and the last government before that.
Energy prices are extremely high which damages the German economy. Renewables depend on massive subsidies that Germany can't afford less and less.
Oh and Gas: Switching supplier from Russia to Qatar wasn't a brilliant decision. You just replace an adversarial supplier with another one. Thats really no reason to pat yourself on the shoulder. Its an extremely short term decision.
Every time I’m in Germany it astounds me how defeatist the German mindset is when it comes to taking risks, nobody wants to run a business or compete with the big guys because they just assume they will automatically lose.
The points you are making sound a lot more like what you would find as political campaigning talking points for deregulation than what's actually transpiring with the German economy.
To 1): Entrepreneurship has always been a lot lower in Germany as in many other countries, as it's not seen as e.g. a capitalist virtue as in the US. The German economic model with it's widespread Mittelstand works well with few entrepeneurs and a large portion of the population working in those enterprises. Not everyone has to be a small entrepeneur and hustle all the time.
To 2): Again, basically the same as it has always been. For the typical company there isn't any more "government interference in the most minute details of running a business" than 20-30 years ago. One also has to keep in mind that (as in most countries) that as long as you are making money and act in good faith according to the spirit of the law, the regulatory bodies are a lot more bendy than one might assume according to the letter of the law.
To 5): You can very much scale your workforce up and down. Limited time contracts and long trial periods are very common. On a larger scale that is typically done via subcontractor structures. Also the typical reasons for wanting to scale down (economic non-viability) are permissible reasons for letting people go. It's also very much possible to fire people for under-performance (you just have to go through the motions of tracking their performance and comparing it to peers or documenting their non-compliance). The only stories I'm actually still hearing in the wild of people not being able to be fired is about "Beamte" (public servants).
4. Climate change-related policy that doesn’t make sense is the new law about heating systems, not nuclear power shutdown. Nuclear power in Europe is risky and very expensive, not least because our supply chain is not secure. Neither African, not Russian/Kazakh uranium are a good option. We still have room for more renewables and they are good.
5. That’s not a bad thing, just very un-American. I have seen plenty of layoffs in IT sector here, it’s not that hard to do it. However overhiring to do a layoff in one year is also the most stupid thing that happened in the last 5 years. I doubt that having too much flexibility does help the business. Maybe managers need to be smarter a bit and use available resources more wisely instead.
I would also add that I have seen a determined anti-education attitude, especially against STEM education. In stark distinction STEM careers are usually considered "lower class" than civil service careers. This is combined with a truly bizarre anti-education stance by education ministers, who see technology not as something which requires a more educated population, but rather means basic education is less important as "computers can do that".
I also completely disagree on work ethic. In my experience Germans want less hours and more work from home, but are willing to be extremely productive in that time frame.
No, only the government thinks like that.
https://www.manager-magazin.de/unternehmen/volkswagen-chef-d... "Germany much better than the picture painted"
https://www.deutschlandfunk.de/arbeitslosenquote-im-euroraum... "Unemployed rate at its lowest in the EU"
Similarly, in the US: https://www.theguardian.com/us-news/article/2024/may/22/poll... "Majority of Americans wrongly believe US is in recession"
We wouldn't be where we are with right-wing votes if we wouldn't have this much panic pessimistic breaking news everywhere I feel. There are definitely more perspectives. (And yes I know, unfair distribution plays also a huge part in very different perspectives..).
"Far" lower wages? Progressive income tax is constant at 42% for essentially the whole salary range that is relevant for an engineer (66-278k).
As a concrete example, total tax burden at:
- 70k is ~40% (42k net)
- 100k with ~44% (56k net)
- 200k with ~46% (107k net)
I'd seriously question the judgement of any engineer that chooses e.g. the part time job that gives you 42k net over the full time job that gives you 56k net (= significant difference of possible living conditions/disposable income) _purely_ on the basis that you earn "far" less per additional Euro. (I think it would be very understandable to choose the less work hours just for having more free time to spend on other things.)
I feel like there is almost an inverse effect once you hit the limit on social contributions (~90k), where it becomes more motivating to earn more, as from that point "only" your income tax increases and health insurance etc. stays steady.
If lower income means you qualify for subsidized housing, subsidized childcare, etc then that can be a big incentive.
I have two sisters with very similar lifestyles despite grossly different incomes. My low-income sister gets her housing, groceries, utilities, childcare and even phone paid for by government programs. My other sister (near median income) lives in an apartment of similar size and quality, buys similar groceries, etc but pays for all of it from her wages.
My low-income sister has no real incentive to increase her official income (although she does value informal economy "hustles" and side-gigs which directly give her disposable income).
However that was not at all what OP argued with engineering salaries and progressive income tax leading to "far less" net income per additional hour worked. The issue you brought up has much more to do with hard subsidy cliffs and high cost of living eating up the disposable income for low income households.
Of course not just because of that. They look at the money they earn, the money they need to live and see that if they reduce their expenses a bit, they can easily do with less hours. The 66k really is interesting, because starting wages are below that (my first job was 55k), but with experience you can easily get into that range. If that happens your income before taxes significantly increase, but your hourly compensation after taxes not as much and so you obviously have to ask yourself whether the additional hours are worth it or whether you can make do with less.
Additionally it makes employers where you generally work less hours (e.g. VW) more attractive. But obviously this has an effect on productivity per person.
This is a manifold problem. Low post-tax wages (except for some government workers), high stress due to few colleagues and tons of work, extremely late age of entry for pensions.
[1]: https://www.businessinsider.de/wirtschaft/faktencheck-robert...
[2]: https://www.tagesspiegel.de/politik/recht-auf-teilzeit-als-f...
[3]: https://www.fr.de/politik/cdu-michael-kretschmer-sachsen-rec...
[5]: https://www.sueddeutsche.de/bayern/bayern-lehrer-soeder-teil...
Certainly looking at the UK economy, I can trace back the source of our current problems well beyond the current election cycles even if the incompetence of the current government has not helped.
The USA has been in “unrestrained borrowing” because it’s been funding itself with continuing resolutions rather than a budget since 2009. That means that the extra trillion dollars in 2009 “temporary” stimulus has been added to the debt every year since on top of the prior trajectory. This is easily seen if you look at the relevant graphs on FRED.
That said, government borrowing or money creation doesn’t directly cause inflation either. Sad to say, the inflation we’re seeing appears to be as much on the production and importing side as it is on the demand side.
Yep, nothing to do with trump.
https://www.crfb.org/blogs/how-much-did-president-trump-add-...
Where are the modern monetary theorists when you need them?
They seem to have all disappeared lately. Used to see them as pundits on news shows daily (or in replies to my comments here) and now they are just gone suddenly.
It was legitimately the belief of the ruling class in the US that printing money isn't inflationary. You would be laughed out of the room to suggest the fact. I was.
For example there have been short and medium term actions to lower down the electricity prices.
There have been some attempts to slow down the bureaucracy.
There have been a strong push for digitalisation (Especially the health system is on nice track, currently). Also it is esspeucz annoying by American HNs to read critics as digital government in US is bad. Estonia is the role model, here.
At all, this is the federal or national level. Other level do try to improve the situation! Darmstadt's push on pharmacy is very impressive, Schlesig Holstein becomes centre for green Energy and also EU is very important here.
You: enlightened
People voting against their governments across the world: no idea how good things are.
Because it presumes the only reason people are voting "right-wing" is because they are reading "doomsday news". Versus, you know, disagreeing with the way the "left wing" have been running things.
Not sure why the left are going with "You're not poor, look at these charts" as a political strategy, but unsurprisingly, people aren't buying it...the world over.
Do you know anything about the current or former German governments?
1. Where did I mention the US?
2. You don't get to tell other people what they can talk about on these forums.
If you think this way remember all the left-wing popular movements in recent times, like Occupy Wallstreet, Universal Healthcare, Climate Change, BLM or Palestine Solidarity. Now why do you think liberals in power did absolutely nothing for any of those causes? Why do left-wing protests do nothing if we are ruled by left-wing politicians?
Otherwise, you are, despite your sarcasm, stating the truth. Nevertheless it might behoove you to learn more about how the US system operates. Like Biden after him and Obama before him, Trump had the choice to either sign the continuing resolutions that Congress sent him, or to refuse to fund the government altogether. This is something called Hobson’s choice and it’s not really a choice at all.
You wont find me defending any president :)
In fact as one can see from the data, the rate of increase slightly moderated during the Trump administration until the pandemic stimulus. Notably there is no corresponding end of pandemic inflection point.
[1] https://www.nytimes.com/2024/03/04/us/politics/trump-corpora...
You don't get to tell people what they can complain about.