Frankfurt am Main – Companies in Germany are not investing enough in the future. That is the finding of a recent IG Metall survey of works councils at 2,596 companies. According to the survey, half of the companies (50%) tend to underinvest in their locations. In 20 percent of cases, works councils even complain that investment is “significantly too low.” The survey represents companies from all IG Metall sectors, with a total of over 1.48 million employees.
The risk of relocations is rising: Instead of actively addressing current challenges, companies are increasingly calling into question their locations and employment levels. Thirty-one percent of works council members see a “high” or “somewhat high” risk of jobs being relocated abroad—four percent more than in a survey conducted in the fall of 2023. In the automotive manufacturing sector, 59 percent view the risk as “high” or “somewhat high.”
In light of the demands of the energy and mobility transition as well as digitalization, works council members currently see a need—at least in part— to adapt the existing business model in 36 percent of companies. This requires a clear strategic vision for the future on the part of companies. However, fewer than half (48%) of the affected companies have a discernibletransformation strategy.
Christiane Benner, President of IG Metall, said: “Our survey results show both positives and negatives. Some companies are in a very robust position, in some cases with record dividends. Investing domestically must be the order of the day. Employees need security and prospects.”
The federal government’s latest budget cuts also conflict with the need for adequate planning certainty during the transformation. One in seven companies (14%) reports negative impacts on their location as a result, and in the skilled trades, the figure is as high as one in three (34%). Although the “traffic light” coalition government did provide relief on electricity prices for manufacturing companies last year, just under half (47%) of the companies affected by rising energy prices consider these measures insufficient. In the steel industry, this figure rises to more than two-thirds of the companies surveyed (68%).
The works council survey also confirms a further slowdown in the economy, though it is less severe than earlier in 2023: While 54 percent of works council members in the fall of 2023 still rated the outlook for their companies over the coming months as good or very good, that figure has now dropped to 51 percent. Most recently, consumer spending in particular has failed to act as a pillar of the economy. Benner: “Anyone who wants to effectively counter the risk of recession needs to see real wages rise significantly again this year.”
Works council members also remain concerned about shortages of skilled workers and labor in general. 82 percent of the companies surveyed currently report at least some difficulty in securing skilled workers for their operations. Nevertheless, the number of apprentices is declining at 30 percent of companies and rising at only 14 percent. Benner: “There is movement in the labor and apprenticeship markets. It is now important for companies to invest in the continuing education of their employees: for their own business, for new business areas, or for a neighboring company in the region. Why not think outside the box?” To this end, companies should also take advantage of the new funding opportunities for training available starting April 1.
Christiane Benner calls on policymakers to provide reliable framework conditions: “Policymakers must clearly commit to Germany as an industrial hub. The government must set the right course now to prevent deindustrialization. Instead of a debt brake and austerity measures, we need an active industrial policy with ambitious public investments, including in infrastructure and education.” To encourage more private investment in the future of German companies, IG Metall is also calling for targeted yet conditional subsidies that link investment incentives to job security, location guarantees, collective bargaining agreements, and the criteria for decent work.
Editor’s note: The survey results can be found in the PDF.
Survey period: February 19 to March 8, 2024
Participating companies: 2,596 (1.48 million employees)
Sectors: all sectors covered by IG Metall, including 72% in the metal and electrical industries and 11% in skilled trades
