Low rate of entrepreneurship reported

In June 2009, new research was published on entrepreneurial activity in Germany. As the Global Entrepreneurship Monitor shows, Germany still has a low rate of business start-ups. Although starting a business can be a viable alternative to dependent employment and helps to create new jobs, many Germans are reluctant to go into business for fear of failure or due to lack of the knowledge required. Both employers and trade unions support different programmes linking schools and companies.

The Global Entrepreneurship Monitor (GEM) surveys and compares national entrepreneurial activity. In 2008, 43 countries participated in the GEM. In Germany, some 4,751 persons were interviewed on their entrepreneurial activities, aspirations and attitudes. In addition, 62 expert interviews were conducted to evaluate the general conditions for setting up a business in Germany. The following research results were presented in the GEM Germany 2008 report (in German), published in June 2009, and in a short analysis (in German, 1.7Mb PDF) for the Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung, IAB).

Research results

Entrepreneurial activity in Germany

The report shows that, in 2008, about 1.95 million persons – representing 3.8% of the employed population aged 18 to 64 years – could be considered entrepreneurs. Entrepreneurs are defined in the study as:

  • persons who plan to go into business;
  • persons who have already started a business within the last 3.5 years and own their business or head it as executives.

German entrepreneurial activity must therefore be considered low in comparison to other countries in the cluster of innovation-driven economies, which includes Japan, the US, the Netherlands and other high-income countries with a low export rate of primary goods.

Reasons for starting a business

Reasons for going into business usually include entrepreneurs’ wishes for greater independence, to realise their own business ideas or to maximise their income (in comparison to salaried employment). In Germany in 2008, however, one to 2.7 entrepreneurs on average fell within the category of necessity-related business start-ups (unemployed people who find it difficult to get another job and start a business to generate income). While setting up a business could serve as a viable alternative to dependent employment or even unemployment, every second participant in the German survey was afraid of failure.

Training on starting a business

For the first time, the survey in many countries included questions on training and education. In the German case, 20% of the participants reported having received some training relating to starting a business. However, as the study also shows, when asked for reasons for avoiding a business start-up, around every third person surveyed referred to their lack of appropriate knowledge and skills. The study highlights that economic topics are seldom included in the syllabus of secondary schools. Therefore, the authors of the study suggest that the number of entrepreneurs could be increased by increasing the teaching of business subjects in schools.

Position and involvement of the social partners

Employer activity

In an article in the business daily Handelsblatt on 23 June 2009, the Association of German Chambers of Industry and Commerce (Deutscher Industrie- und Handelskammertag, DIHK) confirmed that unemployment was the number one motive in Germany to set up a business. However, Marc Evers of DIHK told the daily newspaper that many unemployed persons were not well-enough prepared to go into business.

On the release of the GEM report, the regional branch of the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) in Baden-Württemberg in southwestern Germany stated in a press release (in German) that persons who were ready to take over responsibilities and start a business were not only needed to foster competition, but also to help create employment. Such entrepreneurs played a decisive role in developing new products. Constant innovation as well as its commercialisation was important to uphold high living standards in Germany.

Moreover, the social partners are aware of the need to inform secondary and third-level students of their future career opportunities, workers’ and employees’ rights and to provide (basic) economic knowledge. They therefore host or support certain initiatives in this area for young students. The German Confederation of Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA) supports the so-called SchuleWirtschaft (SchoolBusiness) initiative, which, among other things, organises cooperation between schools and companies and advises on business ventures. These ventures aim to foster the entrepreneurial skills of the participants.

Trade union activity

Similarly, the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) is engaged in an initiative called Schule und Arbeitswelt (School and the Working Environment). DGB members arrange training courses for those applying for jobs, visits to companies and internships at the regional level. They also prepare lessons to be taught in schools on business and economics, the rights of vocational trainees and employees, social standards and other topics.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)

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