Record employment at small and medium-sized enterprises in Germany

Small and medium-sized enterprises (SMEs) in Germany employed record numbers of workers in 2024 despite a difficult economic situation, a report by the KfW state development bank revealed.

The study found that a new high of 33 million people were employed by SMEs in 2024. The term - known as "Mittelstand" in German - covers private companies with an annual turnover up to €500 million ($575 million).

Some 207,000 jobs were added in 2024, a decline from almost half a million in the previous year.

"The public discourse in Germany tends to focus on large enterprises. Yet it is the small and medium-sized enterprises that play a pivotal role in shaping Germany as an economic hub," said KfW chief economist Dirk Schumacher.

Only 39% of SMEs implemented investment projects, a figure close to the all-time low, the survey found.

The biggest obstacles to investment are high energy, material and labour costs, the general economic downturn and the uncertainties surrounding the US government's trade policy.

Added to this is one of the most pressing economic policy issues from the perspective of SMEs: reducing bureaucracy.

On average, around 7% of employees' working time, or 32 hours per month, is spent on bureaucratic processes.

"SMEs are displaying great resilience even in economically challenging times. But that does not mean that they are doing really well," Schumacher said.

"Businesses are suffering from rising costs, which is putting pressure on returns, and their investment appetite is weak. For Germany as a business location, it is essential for the ‘Mittelstand’ to gather strength again," he argued.