Decline in start- up rates continues – slump appears to have bottomed out
Press Release from 2017-02-28 / Group, KfW Research
- Start-up activity falls to multi-year low in historically good labour market
- 91,000 fewer business founders in 2016
- Sharp drop in female entrepreneurship
- Number of necessity entrepreneurs drops to all-time low
The German labour market was in excellent shape in 2016. Year-on-year, the unemployment rate dropped again appreciably by 0.3 percentage points to 6.1%. Not since unification have so many people been in employment as last year. The flipside of this new high, however, is a new low in Germany’s start-up activity. The number of business founders fell to 672,000 persons, 91,000 or 13% fewer than in the previous year. This is the key finding of a preliminary evaluation of the current KfW Start-up Monitor.
In 2016 the labour market developed especially well for women. The female unemployment rate dropped to 5.8% (-0.4 percentage points; men: 6.4%, -0.2 percentage points). With it, female entrepreneurial activity took a particularly sharp dive. While women still founded 327,000 businesses in 2015, that number fell to 270,000 in 2016 (-17%). Male start-up activity fell by only half that rate, or 8%, to 402,000 new businesses. “In 2016 the number of unemployed persons reached the lowest level in 25 years. Employment opportunities are better than they have been for a long time. This is having a particular impact on start-up activity”, said Dr Jörg Zeuner, Chief Economist of KfW. “Not only are we seeing the lowest number of necessity start-ups, at 166,000, which is a good thing. There was also a decline in the number of opportunity entrepreneurs.”
“For 2017 we expect start-up activity to pick up again. The rise in the number of start-up planners in 2016 is an indication of this”, Zeuner described the further outlook.
The development of start-up activity in 2016 is the first finding of this year’s KfW Start-up Monitor. KfW will present the results in detail at a press briefing with Dr Jörg Zeuner, Chief Economist of KfW, in Frankfurt in May 2017.
The KfW Start-up Monitor is based on an annual random selection of 50,000 persons interviewed by telephone since the year 2000 as part of a representative survey of the population. The concept of start-up activity is defined broadly to include full-time and part-time, self-employed and commercial business start-ups. This makes it possible to obtain a comprehensive view of start-up activity.