German family businesses are on the brink of a dangerous situation. According to a recent survey, one in four companies is planning job cuts – a clear warning sign for the entire economy. Many of these traditional businesses, however, hesitate much longer than large corporations because they typically employ highly qualified staff whom they have trained themselves. Such skilled workers are hard to find on the market, which is why layoffs are considered a last resort. But the economic crisis, excessive bureaucracy, and stagnant investment are taking a heavy toll even on the most stable companies. (spiegel: 05.11.25)
Family Businesses Call for Political Reforms
More and more family businesses are finding themselves forced to consider job cuts. Almost a quarter of those surveyed expect a reduction in staff this quarter – just a few months ago, the figure was significantly lower. The ongoing recession is straining balance sheets, weakening liquidity, and slowing down new capital projects. Marie-Christine Ostermann of the Association of Family Businesses warns of a structural collapse: The economic foundations of many companies are faltering.
Especially in regions with a strong middle class, traditional businesses secure apprenticeships, purchasing power, and tax revenue. Where they are absent, unemployment rises rapidly. Without significant tax relief and reduced administrative burdens, a domino effect threatens, with long-term consequences for entire regions.
Economic Crisis Pushes Middle Classes to the Brink
The economic crisis has become a chronic burden. Family businesses, in particular, are struggling with rising energy costs, declining demand, and excessive bureaucracy. Many managing directors report paralyzing regulations that stifle innovation and tie up staff. They are calling for radical reforms to alleviate the pressure and enable them to invest again.
Despite planned measures by the federal government against excessive bureaucracy, skepticism remains. Business owners fear that the announced programs will once again get bogged down in bureaucratic red tape. If genuine relief fails to materialize, a new wave of job losses threatens to hit the workforce.
Lack of Investment Jeopardizes Future Viability
New investments remain scarce. Only one in five medium-sized companies is currently planning to expand its capital projects, while almost half are withdrawing planned projects entirely. This reluctance weakens the competitiveness and diminishes the innovative capacity of the German economy. In a global environment where technological development is decisive, stagnation is becoming the greatest threat.
Data from the Cologne Institute for Economic Research confirms this: Around 36 percent of the companies surveyed are planning job cuts for the coming year, while only 18 percent intend to create new positions. After two years without growth, economists expect at best a minimal increase. The outlook remains bleak.
Traditional Businesses as the Last Bulwark
For decades, family businesses have formed the backbone of the German economy – but even this bastion is faltering. Without fundamental reforms, a gradual erosion threatens, extending far beyond short-term economic downturns. Rising costs, paralyzing bureaucracy, and a lack of investment are jeopardizing what once made small and medium-sized enterprises (SMEs) strong.
Despite everything, many traditional businesses are clinging to their responsibilities. They provide apprenticeships, retain skilled workers, and fight for every job. But without decisive action from policymakers, the collapse of a structure that has brought Germany prosperity and stability for generations is imminent.