It is somewhat ironic that the trade unions called for the largest labor dispute in more than 30 years on this Monday. On the same day, the participants in the “Munich Economic Debates”, organized by the Ifo Institute and the Süddeutsche Zeitung are organized, about Germany as a business location and whether it is endangered due to high energy costs. After all, it is the latter who are primarily driving inflation rates up and public sector employees taking to the streets for more wages.
Not only the employees are affected by rising energy costs, employers have also had to adjust their business to price jumps. Denise Schurzmann, who is the second generation to run the family business Krause Industrieschaltanlagen and who had to accept a tenfold increase in the price of electricity for her company from four to 40 cents per kilowatt hour at the turn of the year, knows about this. However, since its operation is not energy-intensive, the company can still cope with it.
“There are sectors that will no longer be able to operate in Germany in the future”
Ifo President Clemens Fuest believes that energy consumption will play an important role in future location selection. “There are sectors that will no longer be able to operate in Germany in the future,” he says. This would include, for example, the manufacturers of fertilizers and parts of the chemical industry. Fuest rejected the idea of attracting this and other industries back to Germany with state subsidies. Such measures would put too much strain on the national budget – and thus on taxpayers and companies. “We shouldn’t copy every nonsense that the Americans do,” he warned of a possible subsidy race with the United States, which is promoting its domestic industry through the Inflation Reduction Act.
The lack of skilled workers is bigger than the problem of high energy costs anyway, objected entrepreneur Schurzmann. “We get orders that we can’t even process because we don’t have the people,” she says. This is partly because many employees cannot work full-time because they have children to look after. This puts a particular strain on medium-sized companies, as observed by Marion Höllinger, head of Hypovereinsbank. “Many of our major customers now operate their own day-care centre. However, it’s not worth it for medium-sized companies.” In this context, Schurzmann also criticized the splitting of spouses, as it made the switch from part-time to full-time economically unattractive for many of those affected.
The three discussion participants identified laws, regulation and bureaucracy as the last obstacle to Germany as a business location. “We’re paralyzing ourselves,” Fuest said. The installation of the LNG terminals has shown that the administration can also work quickly, adds Höllinger.
Economist Fuest thinks particularly little of the European Union’s taxonomy for sustainable finance, which is intended to promote investment in green technologies. “It would be great progress if we deleted them without replacement,” says Fuest. He sees it as an instrument of the planned economy, since the state determines what is sustainable and what is not. As a result, companies would employ countless people with sustainability reporting who are urgently needed elsewhere. The economist is also skeptical about the announcement by Chancellor Olaf Scholz (SPD), who is expecting an economic miracle because of investments in climate protection. It is about replacing an existing capital stock. For example, when new wind turbines replace a functioning coal-fired power plant. This generates high costs, but not necessarily economic growth.
Nevertheless, he is confident about the future. Fuest predicts that doctoral students will be writing about a traffic light coalition in ten years, which in 2023 will still have shifted to an open energy, skilled labor and digitization policy. Exactly what happens when it doesn’t happen is left to the audience’s imagination.