Business Start-Ups in Germany - Strong Increase of Start-Ups in the Craft Sector

In 2004, the number of newly founded firms in Germany grew by ten per cent year-on-year to about 270,000. The main reason for this strong increase is the amendment to the German Crafts and Trades Regulation Code, which entered into force in January 2004. Moreover, the use of start-up benefits for the unemployed (the so-called "Ich-AG") still greatly influences start-up activity.

These are the findings of the recent ZEW Gründungsreport, a biannual examination of firm foundation activities in Germany conducted by the Centre for European Economic Research (ZEW) in Mannheim.

The significant rise in the 2004 start-up numbers has already been the second consecutive surge and covers all sectors. In western Germany, the start-up numbers increased by approximately ten per cent, compared to about seven per cent in eastern Germany.

At 16 per cent, the highest surge in firm foundations was recorded in the manufacturing industry, which consists of the processing industry and the construction sector. The growth rates can mainly be attributed to the construction sector, where start-up activity increased by 20 per cent. In this context, the most salient branches were "tiling and tessellation", "interior decoration", "painting and varnishing" as well as "heating systems installation". They contributed most to the increase in construction-related start-up activity. With the exception of heating engineers, these branches lost their right to award master craftsman titles in January 2004.

Among corporate service providers the number of new firms increased by about nine per cent. The founders seemed to be particularly interested in the following business areas: data processing services, industrial cleaning and business consultancy.

Displaying an increase of eight per cent, the start-up activity in the trade sector develops just as positively. That is mainly due to mail order business, where start-up numbers have grown by more than 40 per cent and thus more than tripled within two years. In absolute numbers, most new trade businesses were recorded in specialised retail trade of photographic goods and computers.

Contact

Dr. Georg Metzger, E-Mail: metzger@zew.de

Dr. Diana Heger, Phone: +49(0)621/1235-382, E-Mail: heger@zew.de