Dr. Nikolas Stihl, Chairman of the STIHL Advisory Board and Supervisory Board, has issued a stark warning regarding the state of the German economy, describing it as “very serious” and emphasizing that urgent reforms are necessary to safeguard the country’s prosperity and welfare state.
According to Stihl, Germany has suffered a loss of approximately 15 percent of its industrial production over the past eight years. The trend continues month after month, with around 15,000 industrial jobs being lost each time. He noted that private net investment has nearly reached zero, meaning companies are largely just replacing worn-out assets rather than expanding. Stihl attributed this paralysis partly to high costs, which have rendered government measures like the special depreciation package introduced in mid-2025 ineffective.
While acknowledging external pressures from US tariffs, China’s industrial policies, and geopolitical tensions, Stihl argued that the primary issues are domestic: an overregulated economy, high energy and labor costs, high taxes, and declining education levels. He stated that the reform package announced by the government in July, including changes to statutory health insurance, pensions, taxes, and the labor market, is insufficient to reverse the structural crisis. However, he praised the coalition’s ability to compromise, warning that watering down these plans would severely damage business confidence in politics.
Stihl outlined several key areas requiring immediate action. He called for a reduction in bureaucracy, an increase in total hours worked, and lower labor costs. Specifically, he proposed a 40-hour workweek without a corresponding pay increase during the upcoming collective bargaining round in the metal and electrical industry, arguing that Germany no longer has the productivity edge to justify current high labor costs.
He also emphasized the need to cap non-wage labor costs, such as contributions to pension, health, long-term care, and unemployment insurance, at 40 percent of gross wages. Stihl suggested using various levers to boost working hours, including extending working lives, better utilizing part-time and unemployed workers, promoting skilled immigration, and ending practices like same-day sick pay and phone-issued doctor’s notes.
Furthermore, Stihl highlighted the importance of prioritizing research and development. He advocated for better conditions for innovative companies, higher tax incentives, more venture capital, and regulatory leeway. He specifically called for targeted support in future-oriented fields such as AI, robotics, biotechnology, medical technology, space technology, and quantum technologies, noting that the Germany Fund, launched in late 2025, is only a starting point.
Stihl concluded by urging decisive action, stating that Germany has a history of reinvention but must now face its current reality honestly and present a clear plan to citizens. He is the third-generation leader of STIHL, which achieved a turnover of 5.48 billion euros in 2025 with over 20,000 employees worldwide.
The 40-hour week proposal is radical, but with zero private investment, something drastic is clearly needed.
Are we sure this isn’t just cutting worker protections? High bureaucracy and energy costs seem like the real culprits here.